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Award of Attorney’s Fees in
Copyright Litigation in the U S A
Copyright 2010-2011 by Ronald B. Standler
No copyright claimed for works of the U.S. Government.
No copyright claimed for quotations from any source, except for selection of such quotations.
Keywords
attorney’s fees, copyright, defendant, fee-shifting, plaintiff, prevailing,
reasonable, reimbursement, Second Circuit, Seventh Circuit, Ninth Circuit
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
American Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17 U.S.C. § 505 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
7
Old Law in the Second Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diamond (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Roth (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Whimsicality (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Folio Impressions (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
10
10
11
11
U.S. Supreme Court: Fogerty (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lieb (3dCir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
McCulloch (9thCir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Purpose(s) of Copyright Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Modern Law in Second, Fourth, & Ninth Circuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew Bender (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Crescent Publishing (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rosciszewski (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diamond Star (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Superior Form Builders v. Dan Chase (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ninth Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
20
20
22
24
24
24
25
25
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Jackson v. Axton (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Fogerty after remand (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
miscellaneous Ninth Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Modern Law in the Seventh Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NLFC v. Devcom (N.D.Ill. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Cinema (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FASA v. Playmates Toys (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Harris Custom Builders (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gonzales (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assessment Technologies (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Woodhaven Homes (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bryant v. Gordon (N.D. Ill 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
JCW Investments v. Novelty (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Riviera (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mostly Memories v. For Your Ease (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eagle Services (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lieb factors in Seventh Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
before Assessment Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gonzales and Assessment Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
after Assessment Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
prevailing defendant in 7th Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
34
35
36
39
40
42
47
50
50
51
54
55
56
56
57
58
60
Ability to pay fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agee (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lotus v. Borland (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MiTek (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
other copyright cases in the U.S. Courts of Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
inability to pay in other areas of civil law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
need evidence in trial court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
analogy to criminal law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
61
62
63
64
65
67
67
Improper Motive for Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Willful Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
other misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
73
Novel or Complex Legal Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Purely Technical Win . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
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Johnson v. Georgia Highway Express (5thCir. 1974) . . . . . . . . . . . . . . . . . . . . . . . .
78
Lodestar Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Supreme Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hensley v. Eckerhart (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
lodestar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blum v. Stenson (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
lodestar presumed to be the reasonable fee . . . . . . . . . . . . . . . . . . . . . . . . . . . .
same standards in all fee-shifting statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Farrar v. Hobby (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hensley is still valid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Is Johnson still valid? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arbor Hill (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seventh Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
five-factor test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Moriarty (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schlacher (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anderson v. AB Painting and Sandblasting (2009) . . . . . . . . . . . . . . . . . . . . . . . . . .
miscellaneous cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ninth Circuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
82
82
84
85
86
87
88
90
92
95
96
99
100
101
103
105
108
109
Fees Make Plaintiff Whole ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Registration of Copyright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Appeal of Attorney’s Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Standard of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
de novo review on matters of law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Must Consider All Relevant Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
115
116
117
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
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Introduction
I began the legal research in this essay when a federal judge in Illinois granted summary
judgment to the defendant in a copyright infringement case, and the prevailing defendant then filed
a motion to recover $750,000 in attorney’s fees. I did legal research for the plaintiff’s attorney.
After this case was concluded and after all appeals were finished, I posted my legal research — but
not my confidential analysis of the client’s case — at my website in this essay.
This essay reviews the evolution of legal criteria and standards for awards of attorney’s fees in
copyright cases, with emphasis on the U.S. Supreme Court’s opinion in Fogerty, and subsequent
cases in the Second, Fourth, Seventh, and Ninth Circuits. I included the Second and Ninth Circuit
cases, because they are the major sources of copyright law jurisprudence in the USA.1 I included
many Seventh Circuit cases in this essay, because that was the jurisdiction where the case that
inspired this essay was located. I included the Fourth Circuit, because some early Seventh Circuit
cases cited Fourth Circuit cases. Because of the enormous value of fee-shifting in this case,
I searched all federal cases nationwide for some detailed issues.
Beginning at page 82, I include some remarks on the concept of reasonable in fee-shifting in
general, mostly from cases in the U.S. Supreme Court or the Seventh Circuit.
I did my own research first, so I could make an independent evaluation of the law on this
topic. After I had spent approximately 80 hours doing legal research and drafting this essay during
3-17 May 2010, I went to a law library and searched for law review articles about fee-shifting in
copyright cases. I found two articles published before the U.S. Supreme Court opinion in
Fogerty, and four articles after Fogerty.
The topic of fee-shifting in copyright cases has received little attention in law review articles,
and appellate opinions generally dispose of appeals of fee awards/denials in a terse paragraph or
two. This lack of attention to fee-shifting is strange because the amount of attorney’s fees often
exceeds US$ 100,000 and the amount of fees is often greater than the amount of damages awarded
to a prevailing plaintiff in a copyright infringement case.
The major publishing companies and television networks have headquarters in New York City
(Second Circuit) and movie studios have headquarters in the Los Angeles area (Ninth Circuit).
1
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disclaimer
This essay presents general information about an interesting topic in law, but is not legal
advice for your specific problem. See my disclaimer at http://www.rbs2.com/disclaim.htm .
From reading e-mail sent to me by readers of my essays since 1998, I am aware that readers often
use my essays as a source of free legal advice on their personal problem. Such use is not
appropriate, for reasons given at http://www.rbs2.com/advice.htm .
I list the cases in chronological order in this essay, so the reader can easily follow the historical
development of law. If I were writing a legal brief, then I would use the conventional citation
order given in the Bluebook. Because the original purpose of this essay was to collect cases that
could be cited in a brief to a court, I have included long quotations from court cases.
Overview
If a plaintiff registers his/her copyright with the Copyright Office before the defendant
infringes the copyright, and if the plaintiff wins the copyright infringement litigation, then courts
may order the defendant to reimburse at least some of the plaintiff’s attorney’s fees, under
17 U.S.C. §§ 412, 505.
If a defendant wins copyright infringement litigation, then courts may order the plaintiff to
reimburse at least some of the defendant’s legal fees, under 17 U.S.C. § 505. The Seventh Circuit
has case law since the year 2004 that establishes a “very strong presumption” that plaintiff will pay
the prevailing defendant’s attorney’s fees, as explained below, beginning at page 42.
Before the year 1994, prevailing plaintiffs were commonly awarded attorney’s fees, but a
prevailing defendant needed to prove that plaintiff’s claims were either baseless, unreasonable,
frivolous, or brought in bad faith before a prevailing defendant could recover attorney’s fees.2
This dual standard was overruled by the U.S. Supreme Court in Fogerty in 1994. For this reason,
one needs to use caution when citing cases decided before 1995 involving reimbursement of
attorney’s fees in copyright litigation.
There are two sets of criteria that judges should consider when awarding attorney’s fees in
copyright cases. One set is contained in Lieb,3 a Third Circuit case from 1986, the other set is
contained in McCulloch,4 a Ninth Circuit case from 1987. The U.S. Supreme Court in Fogerty
2
See the explanation that begins at page 9, below.
3
Lieb is discussed below, beginning at page 13.
4
McCulloch is discussed below, beginning at page 14.
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endorsed the factors in Lieb. The Lieb factors are not particularly helpful to judges, and my
reading of dozens of cases shows a lack of consistency by trial judges in the awarding of
attorney’s fees. Judge Posner of the Seventh Circuit noted this problem and wrote his own
factors,5 which are binding precedent only in the Seventh Circuit, and which may conflict with the
U.S. Supreme Court’s suggested factors in Fogerty. In short, this area of the law is a mess.
There are at least two copyright cases in which attorney’s fees of more than one million
dollars have been awarded: Basic Books v. Kinko’s Graphics, 21 USPQ2d 1639,
1991 WL 311892 (S.D.N.Y. 1991) (plaintiff awarded $1.365 million in fees); Fogerty v.
Fantasy, 94 F.3d 553 (9thCir. 1996) (defendant awarded $1.347 million in fees, plus fees for the
final appeal).6
For others who are doing searches of cases in this area, I suggest the following Westlaw
terms and connectors search:
copyright! /p ((attorney! counsel!) +1 fee) /s ....
where the ellipses at the end must be replaced with additional relevant terms.
American Rule
The American Rule is that each party in litigation pays their own attorney’s fees, in contrast
with the British Rule that the loser reimburses the attorney’s fees of the prevailing party. The U.S.
Supreme Court has issued a long discussion of the American Rule in Alyeska Pipeline Service Co.
v. Wilderness Society, 421 U.S. 240, 247-258 (1975). In 2007, the U.S. Supreme Court wrote:
Under the American Rule, “the prevailing litigant is ordinarily not entitled to collect a
reasonable attorneys' fee from the loser.” Alyeska Pipeline Service Co. v. Wilderness Society,
421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975); see Hauenstein v. Lynham,
100 U.S. 483, 490-491, 25 L.Ed. 628 (1880); Arcambel v. Wiseman, 3 Dall. 306, 1 L.Ed.
613 (1796). This default rule can, of course, be overcome by statute. Fleischmann Distilling
Corp. v. Maier Brewing Co., 386 U.S. 714, 717, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967).
It can also be overcome by an “enforceable contract” allocating attorney's fees. Ibid.
Travelers Casualty and Surety Co. of America v. Pacific Gas and Elec. Co., 549 U.S. 443, 448
(2007).
5 See Gonzales, which is discussed below, beginning at page 40, and the following case of
Assessment Technologies.
6
Fogerty is discussed below, beginning at page 26.
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17 U.S.C. § 505
The Copyright Act of 1976 contains a fee-shifting statute, but the award of attorney’s fees is
discretionary with the judge.
In any civil action under this title, the court in its discretion may allow the recovery of full
costs by or against any party other than the United States or an officer thereof. Except as
otherwise provided by this title, the court may also award a reasonable attorney’s fee to the
prevailing party as part of the costs.
17 U.S.C. § 505 (enacted 1976, still current April 2010).
The section contains no factors for the judge to consider in deciding whether to award attorney’s
fees. The legislative history for this section of the Copyright Act of 1976 is terse and unhelpful.
The previous copyright statute, The Copyright Act of 1909, also tersely authorized awarding
of attorney's fees to the prevailing party in a copyright case. 17 U.S.C. § 40 (“... the court may
award to the prevailing party a reasonable attorney’s fee as part of the costs.”). Quoted in Marks v.
Leo Feist, Inc., 8 F.2d 460, 461 (2dCir. 1925); Official Aviation Guide Co. v. American Aviation
Associates, 162 F.2d 541, 543 (7thCir. 1947); Lewys v. O'Neill, 49 F.2d 603, 618 (S.D.N.Y.
1931).
To understand fee-shifting in copyright litigation, it is first necessary to have a clear
understanding of why there is a fee-shifting statute for copyright litigation. The U.S. Congress
failed to explain why they included a fee-shifting statute in the Copyright Acts of 1909 and 1976.
Awards for copyright infringement are often less than the attorney’s fees of plaintiff, which makes
it a Pyrrhic victory for plaintiff. A copyright law treatise from the year 1917 says:
The amount of money frequently involved in copyright litigation, especially on the part of the
defendant is trifling. The expense of any litigation is considerable. Unless, therefore, some
provision is made for financial protection to a litigant, if successful, it may not pay a party to
defend rights, even if valid, a situation opposed to justice. .... It is increasingly recognized
that the person who forces another to engage counsel either to vindicate, or defend, a right
should bear the expense of such engagement and not his successful opponent. ....
Arthur Weil, AMERICAN COPYRIGHT LAW, 530-531 (1917).
Quoted in Fogerty v Fantasy, 510 U.S. 517, 529 (1994) (omits “either” in last sentence).
Allowing plaintiff to recover both damages and attorney’s fees makes it worthwhile for a plaintiff
to litigate copyright claims. The reasoning in the previous sentence is consistent with the old rule
in the Second Circuit (see next section of this essay) that victorious plaintiffs routinely recovered
their attorney’s fees, but victorious defendants were awarded attorney’s fees only if plaintiff’s
claims were unreasonable, baseless, or frivolous.
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Weil in his book7 quotes an early judicial opinion that refers to fee-shifting in The Copyright Act
of 1909:
The counsel fee provided for in the Copyright Act [of 1909] is merely a revival of old
practice. I am not informed that it is known what reasons induced Congress to revive old
practice in respect of copyrights only. Having, therefore, nothing but the text of the law to
guide me, I do not regard the congressional provision as punitive, and I assume that the intent
of Congress was merely to compensate counsel for professional labors. Consequently
I inquire, not only into the extent of professional labor known to the court, but the importance
of the litigation, both as to the principle involved and the pecuniary magnitude of the case.
In my judgment the professional labor in this matter was out of all proportion to the principle
or the amount of money involved. .... On the other hand, if I am right in my interpretation of
the Copyright Act, the future importance of this litigation is but small, and the amount of
money involved is certainly trivial.
Universal Film Mfg. Co. v. Copperman, 218 F. 577, 581-582, n.1 (2dCir. 1914) (quoting Judge
Hough of the U.S. District Court, who awarded attorney’s fees to a prevailing defendant).
A book on copyright law that was published approximately 16 years after the Copyright Act of
1909 authorized fee-shifting, tersely said:
The court may also award to the prevailing party in a copyright suit a reasonable
attorney’s fee as a part of the costs. The fees so awarded in cases reported have usually been
small. [citing 3 cases]
Richard C. De Wolf, AN OUTLINE OF COPYRIGHT LAW, at 165 (1925).
Remarkably, my searches of opinions in Westlaw written by U.S. District Courts and U.S.
Courts of Appeals found few judicial opinions that attempted to explain why the Copyright Acts of
1909 and 1976 contain a fee-shifting provision. Apparently, judges are content to mechanically
apply a statute without understanding the reason for the statute. Of course, without understanding
the reason for the statute, it is impossible to interpret the statute properly.
7
Arthur Weil, AMERICAN C OPYRIGHT L AW, at 530 (1917).
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Old Law in the Second Circuit
In March 1962, the Second Circuit affirmed an award of attorney's fees to a prevailing plaintiff:
The award of attorney's fees is discretionary with the court under the act. [citation omitted]
Since such a provision for attorney's fees is at variance with the usual practice in litigation
before our courts [i.e., the American Rule is the usual practice], however, it has been sparingly
used and the amounts awarded modest. [citation omitted] In the case at bar, while a
substantial amount of time was spent by plaintiffs' counsel, much of it was necessitated by
counsel's unfamiliarity with the field. Considering, as we must, the amount of work
necessary, the amount of work done, the skill employed, the monetary amount involved and
the result achieved, we feel that $10,000 is more than a liberal allowance and order the amount
of attorney's fees reduced to $5,000.
Orgel v. Clark Boardman Co., 301 F.2d 119, 122 (2dCir. 1962), cert. denied, 371 U.S. 817
(1962).
In July 1967, a U.S. District Court in New York City summarized the law:
Section 116 of the Copyright Statute (Title 17 U.S.C. § 116) authorizes the Court in the
exercise of its discretion to award ‘to the prevailing party a reasonable attorney's fee as part of
the costs'. It represents a departure from the normal practice of not permitting assessment of
attorneys' fees as costs, which is designed to insure the availability of our courts to all alike by
not rendering them prohibitive to the poor through imposition of heavy costs. For this reason
an award of counsel fees is considered in the nature of a penalty which the Court has the
discretionary power to impose on the losing party, see Rose v. Bourne, Inc., 176 F.Supp. 605
(S.D.N.Y.), aff’d, 279 F.2d 79 (2d Cir.), cert. denied, 364 U.S. 880, 81 S.Ct. 170, 5 L.Ed.2d
103 (1960), and the statute has been ‘sparingly used and the amounts awarded modest’. Orgel
v. Clark Boardman Co., 301 F.2d 119, 2 A.L.R.3d 1203 (2d Cir.), cert. denied, 371 U.S.
817, 83 S.Ct. 31, 9 L.Ed.2d 58 (1962). Accordingly the considerations prompting an award
of fees to a successful plaintiff must of necessity differ from those determining whether a
prevailing defendant is entitled to such an award. See Davis v. E. I. DuPont de Nemours &
Co., 257 F.Supp. 729 (S.D.N.Y. 1966, per Feinberg, J.). The purpose of an award of counsel
fees to a plaintiff is to deter copyright infringement. See Nom Music, Inc. v. Kaslin, 227
F.Supp. 922, 928 (S.D.N.Y. 1964), aff'd., 343 F.2d 198 (2d Cir. 1965). In the case of a
prevailing defendant, however, prevention of infringement is obviously not a factor; and if an
award is to be made at all, it represents a penalty imposed upon the plaintiff for institution of a
baseless, frivolous, or unreasonable suit, or one instituted in bad faith. Edward B. Marks
Music Corp. v. Continental Record Corp., 222 F.2d 488 (2d Cir.), cert. denied, 350 U.S. 861,
76 S.Ct. 101, 100 L.Ed. 764 (1955); Cloth v. Hyman, 146 F.Supp. 185 (S.D.N.Y. 1956);
Barton Candy Corp. v Tell Chocolate Novelties Corp., 178 F.Supp. 577 (E.D.N.Y. 1959);
Davis v. E. I. DuPont de Nemours & Co., supra.
Breffort v. I Had A Ball Co., 271 F.Supp. 623, 627 (S.D.N.Y. 1967).
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Diamond (1984)
In September 1984, the Second Circuit affirmed an award of attorney's fees to a prevailing
defendant in a copyright case, and validated a number of earlier holdings in the U.S. District Court
in New York City:
Section 505 of the Copyright Act, 17 U.S.C. § 505, permits a court to “award a
reasonable attorney's fee to the prevailing party,” but a distinction exists between the award of
fees to a prevailing plaintiff and an award to a prevailing defendant. Grosset & Dunlap, Inc. v.
Gulf & Western Corp., 534 F.Supp. 606 (S.D.N.Y. 1982). Because Section 505 is intended
in part to encourage the assertion of colorable copyright claims and to deter infringement, fees
are generally awarded to prevailing plaintiffs. See e.g., Breffort v. I Had A Ball Co., 271
F.Supp. 623, 627-28 (S.D.N.Y. 1967), cf. Davis v. E.I. Dupont deNemours & Co., 257
F.Supp. 729, 731 (S.D.N.Y. 1966). Fees to a prevailing defendant should not be awarded
when the plaintiff's claim is colorable since such awards would diminish the intended
incentive to bring such claims. See, e.g., Italian Book Corp. v. American Broadcasting Co.,
458 F.Supp. 65 (S.D.N.Y. 1978). When the plaintiff's claims are objectively without
arguable merit, however, a prevailing defendant may recover attorney's fees under Section
505. See Mailer v. R.K.O. Teleradio Pictures, Inc., 332 F.2d 747 (2dCir. 1964). Because the
award of fees has a statutory basis, a finding of subjective bad faith is not necessary, compare
Nemeroff v. Abelson, 704 F.2d 652 (2dCir. 1983) with Christiansburg Garment Co. v.
EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), although the deliberate assertion
of a meritless federal claim solely to obtain federal jurisdiction over pendent state claims
qualifies as bad faith no matter how meritorious the state claims.
Judge Griesa [in the trial court] found appellant's copyright claim to be without a
reasonable legal basis, a conclusion which the discussion above amply supports. An award of
statutory attorney's fees to the defendants was thus a proper exercise of discretion. The
amount awarded was limited to services rendered in defense of the copyright claim and was
reasonable.
Diamond v. Am-Law Pub. Corp., 745 F.2d 142, 148-149 (2dCir. 1984).
Roth (1986)
In March 1986, the Second Circuit vacated the award of attorney’s fees to a prevailing defendant in
a copyright case.
“The award of attorney's fees is discretionary with the court under the [copyright] act.”
Orgel v. Clark Boardman Co., 301 F.2d 119, 122 (2d Cir.), cert. denied, 371 U.S. 817,
83 S.Ct. 31, 9 L.Ed.2d 58 (1962). The determination of whether a prevailing party is entitled
to an award of attorneys' fees depends, in part, upon whether the plaintiff or defendant
prevails. Because the Copyright Act is intended to encourage suits to redress copyright
infringement, fees are generally awarded to a prevailing plaintiff. See Diamond v. Am-Law
Publishing Corp., 745 F.2d 142, 148 (2dCir. 1984). The logical converse of this legislative
purpose, however, requires that attorneys’ fees to prevailing defendants be awarded
circumspectly to avoid chilling a copyright holder's incentive to sue on “colorable” claims.
See id. This is particularly true since an award of attorneys' fees is deemed to serve the
additional purpose of penalizing the losing party. See Grosset & Dunlap, Inc. v. Gulf &
Western Corp., 534 F.Supp. 606, 609 (S.D.N.Y. 1982).
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The provision authorizing attorneys' fees “has been sparingly used and the amounts
awarded modest.” Orgel, 301 F.2d at 122. Prevailing defendants are granted such fees only
when the “court finds plaintiff's suit to have been baseless, frivolous, unreasonable, or
brought in bad faith.” Grosset & Dunlap, 534 F.Supp. at 610; see also Jartech, Inc. v.
Clancy, 666 F.2d 403, 407 (9thCir.), cert. denied, 459 U.S. 879, 103 S.Ct. 175, 74 L.Ed.2d
143 (1982).
Roth v. Pritikin, 787 F.2d 54, 57 (2dCir. 1986).
Roth v. Pritikin is unusual in that it contains an assertion that the purpose of the Copyright Act is to
vindicate property rights (“encourage suits to redress copyright infringement”).8
Whimsicality (1989)
In December 1989, the Second Circuit vacated that part of the district court's order which declined
to award attorney's fees to prevailing defendants on summary judgment, and remanded the case to
the district court for determination of whether plaintiff's misrepresentation in a copyright
application was "bad faith" that would justify an award of attorney's fees to defendants.
The Copyright Act provides that the district court, in its discretion, may award attorney's
fees to the prevailing party. 17 U.S.C. § 505 (1982). We review the determination of the
district court for abuse of discretion. Roth v. Pritikin, 787 F.2d 54, 57 (2Cir. 1986).
We have interpreted the statute to distinguish between prevailing plaintiffs and
defendants. Plaintiffs who prevail are awarded fees as a matter of course. Diamond v. AmLaw Pub. Corp., 745 F.2d 142, 148 (2 Cir. 1984). Defendants, on the other hand, will
recover if “plaintiff's claims are objectively without arguable merit,” id., or “ ‘baseless,
frivolous, unreasonable or brought in bad faith.’ ” Roth, supra, 787 F.2d at 57 (quoting
Grosset & Dunlap, Inc. v. Gulf & Western Corp., 534 F.Supp. 606, 610 (S.D.N.Y. 1982)).
Whimsicality, Inc. v. Rubie's Costume Co., Inc., 891 F.2d 452, 456-457 (2dCir. 1989).
Folio Impressions (1991)
In 1991, The U.S. Court of Appeals in New York City wrote:
Defendants requested that attorney's fees be awarded pursuant to 17 U.S.C. § 505 of the
Copyright Act, which authorizes the district court in its discretion to award attorney's fees to
the prevailing party. See Whimsicality, Inc., 891 F.2d at 456. The district court denied the
defendants' request. Whether to award attorney's fees depends, in part, on whether the
plaintiff or the defendant is the prevailing party. Roth v. Pritikin, 787 F.2d 54, 57 (2dCir.
1986). Fees are awarded to prevailing plaintiffs as a matter of course, Whimsicality, Inc., 891
F.2d at 457, but defendants are not awarded fees unless the plaintiff's suit is “baseless,
frivolous, unreasonable, or brought in bad faith,” Roth, 787 F.2d at 57, or “objectively
without arguable merit.” Diamond v. Am-Law Publishing Corp., 745 F.2d 142, 148 (2dCir.
1984). This is because awards of attorney's fees to prevailing defendants on a more liberal
But see Peter Jazi, “505 And All That — The Defendant’s Dilemma,” 55 L AW &
CONTEMPORARY PROBLEMS 107, 112 and n.17, 117 (Spring 1992) (See p. 115 for terse remarks about
value of preserving the public domain).
8
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basis would chill a copyright holder's incentive to sue to redress infringement, in
contravention of the Copyright Act's intention to encourage such suits. See Roth, 787 F.2d at
57.
Folio Impressions, Inc. v. Byer California, 937 F.2d 759, 766-767 (2dCir. 1991).
This line of cases in the Second Circuit was overruled by the U.S. Supreme Court in Fogerty v.
Fantasy, Inc., 510 U.S. 517 (1994).
U.S. Supreme Court: Fogerty (1994)
A prevailing defendant in a copyright infringement case moved for attorney’s fees, which the
trial court denied. The U.S. Court of Appeals affirmed, but the U.S. Supreme Court reversed.
It is apparently obvious why a prevailing plaintiff should have his attorney’s fees reimbursed:
damages in copyright infringement cases are often less than the attorney’s fees of plaintiff. The
Court noted the reason why a prevailing defendant should have his attorney’s fees reimbursed:
Because copyright law ultimately serves the purpose of enriching the general public
through access to creative works, it is peculiarly important that the boundaries of copyright
law be demarcated as clearly as possible. To that end, defendants who seek to advance a
variety of meritorious copyright defenses should be encouraged to litigate them to the same
extent that plaintiffs are encouraged to litigate meritorious claims of infringement. In the case
before us, the successful defense of “The Old Man Down the Road” increased public
exposure to a musical work that could, as a result, lead to further creative pieces. Thus a
successful defense of a copyright infringement action may further the policies of the
Copyright Act every bit as much as a successful prosecution of an infringement claim by the
holder of a copyright.
Fogerty v. Fantasy, Inc., 510 U.S. 517, 527 (1994).
The U.S. Supreme Court concluded:
Thus we reject both the “dual standard” adopted by several of the Courts of Appeals and
petitioner's claim that § 505 enacted the British Rule for automatic recovery of attorney's fees
by the prevailing party. Prevailing plaintiffs and prevailing defendants are to be treated alike,
but attorney’s fees are to be awarded to prevailing parties only as a matter of the court’s
discretion. “There is no precise rule or formula for making these determinations,” but instead
equitable discretion should be exercised “in light of the considerations we have identified.”
Hensley v. Eckerhart, 461 U.S. 424, 436-437, 103 S.Ct. 1933, 1941-1942, 103 S.Ct. 1933
(1983).FN19 Because the Court of Appeals erroneously held petitioner, the prevailing
defendant, to a more stringent standard than that applicable to a prevailing plaintiff, its
judgment is reversed, and the case is remanded for further proceedings consistent with this
opinion.
FN19. Some courts following the evenhanded standard have suggested several
nonexclusive factors to guide courts’ discretion. For example, the Third Circuit has listed
several nonexclusive factors that courts should consider in making awards of attorney’s
fees to any prevailing party. These factors include “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the
need in particular circumstances to advance considerations of compensation and
deterrence.” Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (1986). We agree that
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such factors may be used to guide courts’ discretion, so long as such factors are faithful
to the purposes of the Copyright Act and are applied to prevailing plaintiffs and
defendants in an evenhanded manner.
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534-535 (1994).
The final disposition of Fogerty is discussed below, beginning at page 26.
Footnote 19 in Fogerty is welcome guidance, because the Copyright statute provides
no guidance for judges. Immediately below, I quote extensively from Lieb, to give more detailed
guidance.
Lieb (3dCir. 1986)
The U.S. Supreme Court in Fogerty cited Lieb with approval, so I quote the relevant part of
Lieb below, to expand on the Court’s guidance. In April 1986, the U.S. Court of Appeals in New
Jersey wrote in Lieb:
Similarly, we do not believe Congress intended that the prevailing party should be
awarded attorney's fees in every case as a matter of course. Were that the contemplated result,
the statute would not have left the matter to the courts' discretion but would simply have
mandated a fee allowance. [Cite as: 788 F.2d at 156] That Congress was quite able to
distinguish the alternatives is made clear by the language in section 40 of the predecessor
statute: “Full costs shall be allowed, and the court may award ... a reasonable attorney's fee as
part of the costs.” (emphasis added).
Thus we do not require bad faith, nor do we mandate an allowance of fees as a
concomitant of prevailing in every case, but we do favor an evenhanded approach. The
district courts' discretion may be exercised within these boundaries. Factors which should
play a part include frivolousness, motivation, objective unreasonableness (both in the
factual and in the legal components of the case) and the need in particular
circumstances to advance considerations of compensation and deterrence.9
We expressly do not limit the factors to those we have mentioned, realizing that others may
present themselves in specific situations. Moreover, we may not usurp that broad area which
Congress has reserved for the district judge.
Having decided that fees should be awarded, the district court must then determine what
amount is reasonable under the circumstances. As we noted in Chappell, 334 F.2d at 306, the
relative complexity of the litigation is relevant.10 Also, a sum greater than what the client
has been charged may not be assessed, but the award need not be that large. Harris v. Emus
Records Corp., 734 F.2d 1329 (9thCir. 1984); Key West Hand Print Fabrics, Inc. v. Serbin,
Inc., 269 F.Supp. 605 (S.D.Fla. 1966). The relative financial strength of the parties is a
valid consideration,11 American Metropolitan Enterprises of New York, Inc. v. Warner
Boldface added by Standler. This sentence was quoted in Fogerty v. Fantasy, Inc., 510 U.S.
517, 534, n.19 (1994).
9
10
Boldface added by Standler.
11
Boldface added by Standler.
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Bros. Records, Inc., 389 F.2d 903 (2dCir. 1968); Italian Book Corp. v. American
Broadcasting Companies, Inc., 458 F.Supp. 65 (S.D.N.Y. 1978), as are the damages, Oboler
v. Goldin, 714 F.2d 211 (2dCir. 1983); Russell v. Price, 612 F.2d 1123 (9thCir. 1979); Cloth
v. Hyman, 146 F.Supp. 185 (S.D.N.Y. 1956). Where bad faith12 is present that, too, may
affect the size of the award. Landsberg v. Scrabble Crossword Game Players, Inc., 736 F.2d
485 (9thCir. 1984).
In this case, plaintiff had ample opportunity to justify the filing of a lawsuit that patently
had no legal merit. The principal justification plaintiff has proffered to this court has been the
absence of bad faith, which as we noted above is not a prerequisite for the award of counsel
fees under the Copyright Act. Thus, under ordinary circumstances, an award of some counsel
fees to defendants would be appropriate. However, the arguments before the district court
may suggest some other reason why an award of counsel fees is inappropriate, and we do not
preclude the district court from so concluding on remand.
If the district court concludes that fees are proper, it should then consider the relative
simplicity of the defense, and whether the retention of out-of-town counsel with the
accompanying increased expense was necessary. The sum requested is large, and we note
that it may be both disproportionate to the amount at stake and excessive in light of
the plaintiff's resources. We emphasize that the aims of the statute are compensation
and deterrence where appropriate, but not ruination.13
Lieb v. Topstone Industries, Inc., 788 F.2d 151, 155-156 (3dCir. 1986).
McCulloch (9thCir. 1987)
There is a less commonly used list of four factors to consider in awarding attorney’s fees in
copyright cases, which were first enunciated by Judge Blumenfeld in U.S. District Court in
Connecticut in April 1980, in a case involving prevailing plaintiffs who were members of the
American Society of Composers, Authors and Publishers (ASCAP):
Some of the considerations that might justify the denial of fees include [1] the presence of a
complex or novel issue of law that the defendants litigate vigorously and in good faith, Official
Aviation Guide Co. v. American Aviation Ass'n, 162 F.2d 541, 543 (7thCir. 1947);
[2] the defendants' status as innocent, rather than wilful or knowing, infringers, see Samet &
Wells, Inc. v. Shalom Toy Co., 429 F.Supp. 895, 904 (E.D.N.Y. 1977), aff’d mem., 578 F.2d
1369 (2dCir. 1978); [3] bad faith on the plaintiffs' part in prosecuting the action, see Leo
Feist, Inc. v. Apollo Records, N.Y. Corp, 300 F.Supp. 32, 43 (S.D.N.Y.), aff’d, 418 F.2d
1249 (2dCir. 1969), cert. denied, 398 U.S. 904, 90 S.Ct. 1694, 26 L.Ed.2d 63 (1970);
or [4] a good faith attempt by the defendants to avoid infringement, Shapiro, Bernstein & Co.
v. Veltin, 47 F.Supp. 648, 650 (W.D.La. 1942).
None of these justifications for denying an award of fees is present in this case. Quite the
contrary, liability is unquestionable on both the law and the facts; the defendants' conduct,
whatever their precise state of mind, was certainly not innocent; they repeatedly rebuffed
offers to resolve this dispute prior to the commencement of litigation; their defense efforts in
this action have been spare; and they made no attempt whatsoever to avoid infringement
although they were well aware of the law's requirements. While statutory damages are
assessed in lieu of actual damages, “the counsel fees provision was designed ‘to penalize the
12
Boldface added by Standler.
13
Boldface added by Standler.
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losing party as (well as) to compensate the prevailing party.’ ” Leo Feist, Inc. v. Apollo
Records, N.Y. Corp., supra, at 43 (quoting Norbay Music, Inc. v. King Records, Inc.,
249 F.Supp. 285, 289 (S.D.N.Y. 1966)). Equity dictates that the defendants be required to
pay the plaintiffs an allowance for attorneys' fees.
Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 915 (D.C.Conn. 1980).
These four factors were included in an opinion of the U.S. Court of Appeals in the Ninth Circuit
that involved a prevailing plaintiff:
However, we do not believe Congress intended that the prevailing plaintiff should be awarded
attorney’s fees in every case. Lieb v. Topstone Indus., Inc., 788 F.2d 151, 155-56 (3dCir.
1986). Considerations which justify the denial of fees may include (1) the presence of a
complex or novel issue of law that the defendant litigates vigorously and in good faith,
(2) the defendant’s status as innocent, rather than willful or knowing, infringer,
(3) the plaintiff’s prosecution of the case in bad faith, and (4) the defendant’s good faith
attempt to avoid infringement. Ford Motor Co. v. B & H Supply, Inc., 646 F.Supp. 975, 992
(D.Minn. 1986); Van Halen Music v. Palmer, 626 F.Supp. 1163, 1167 (W.D.Ark. 1986);
Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 915 (D.Conn. 1980). We do not intend
by this recitation to limit the factors to those mentioned above.
McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323 (9thCir. 1987), overruled on other grounds
by Fogerty v. Fantasy, Inc., 510 U.S. 517, 525-526 (1994). These four factors in McCulloch
were quoted with approval in Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555,
1583 (Fed.Cir. 1992). Because the U.S. Supreme Court in Fogerty was clear that prevailing
plaintiffs and prevailing defendants should be treated alike, one can interchange “defendant” and
“plaintiff” in the first consideration in McCulloch.
Discussing the four factors in McCulloch:
1. Lieb cites Chappell, 334 F.2d 303, 306 (3dCir. 1964) (affirming award of attorney’s fees in
case with five infringements “with several hotly contested factual issues”) for the relevance of
“relative complexity of the litigation”, which is similar to “complex” in the first factor in
McCulloch. More detail about no attorney’s fees for litigating novel issue(s) of law is at
page 73, below.
2. More detail about a willful infringer being ordered to reimburse attorney’s fees of a prevailing
plaintiff is at page 71, below.
3. The “motivation” factor in Lieb is similar to the “bad faith” factor in McCulloch. This “bad
faith” factor is consistent with old law in Second Circuit (see page 9, above) and is also
consistent with plaintiff’s improper motive (see page 69, below).
4. The fourth factor in McCulloch, “defendant’s good-faith attempt to avoid infringement”, is
related to the second factor, about defendant’s status as an innocent or willful infringer.
The U.S. Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, n.19 (1994)
explicitly said that the factors in Lieb were “nonexclusive”, which means that it is possible that
other factors — like those in McCulloch — can also be appropriate. Indeed, the U.S. Supreme
Court quoted without comment the first factor in McCulloch. Fogerty, 510 U.S. at 521, n.6.
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Because of the Supreme Court’s requirement of “evenhandedness” in Fogerty, the words
“defendant” and “plaintiff” should be stricken from factors 1 and 3 in McCulloch, to make these
factors apply equally to both plaintiffs and defendants. Instead, we should say that an improper or
bad-faith motivation of the losing party justifies an award of attorney’s fees to the prevailing party.
That may be a reason why the Supreme Court in Fogerty did not quote the factors in McCulloch,
since some editing would be required. More reasons are in the next paragraph.
Why did the U.S. Supreme Court in Fogerty chose to endorse the factors in Lieb and ignore
the factors in McCulloch? In Fogerty, the Court agreed with Lieb’s “evenhanded” approach to
attorney’s fees, and rejected the dual standard14 in the Second and Ninth Circuits — including
rejecting Cooling Systems v. Stuart Radiator, 777 F.2d 485 (9thCir. 1985) and also rejecting the
dual standard in McCulloch. In the footnote that contains the Lieb factors, the Court says:
Some courts following the evenhanded standard have suggested several nonexclusive
factors to guide courts’ discretion. For example, the Third Circuit has listed several
nonexclusive factors that courts should consider in making awards of attorney’s fees to any
prevailing party. These factors include ....
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, n.19 (1994).
Note that the Court in Fogerty did not say that the Lieb factors were the only factors to consider.
Note that the Court in Fogerty neither criticized nor rejected the factors in McCulloch. It is
essential to note that the factors to consider in awarding attorney’s fees were not the issue before
the Court in Fogerty — the issue was resolving the conflict between the Ninth Circuit’s dual
standard and the Third Circuit’s “evenhanded” approach. Fogerty,. 510 U.S. at 521. Also notice
the Court’s final sentence:
Because the [Ninth Circuit] Court of Appeals erroneously held petitioner, the prevailing
defendant, to a more stringent standard than that applicable to a prevailing plaintiff, its
judgment is reversed, and the case is remanded for further proceedings consistent with this
opinion.
Fogerty, 510 U.S. at 534-535. Again, it was not the Ninth Circuit’s factors that were reversed by
the Court. It was the dual standard (i.e., “held ... the prevailing defendant to a more stringent
standard”) that was reversed. I think that is why the Court put the Lieb factors in a footnote,
instead of in the text of the Court’s opinion: the factors are not relevant to the issue before the
Court.
I suggest that the Court’s endorsement of the Lieb factors caused the McCulloch factors to
wither, although the Court never considered the validity of the McCulloch factors. The withering
of the McCulloch factors is unfortunate because they include common issues not explicitly
addressed by the Lieb factors, such as willfulness of infringement, and novel issues of law.
The dual standard routinely allowed attorney’s fees to prevailing plaintiffs, but which required
prevailing defendants to prove either “bad faith” by plaintiffs or frivolous claims by plaintiffs. Thus,
prevailing defendants were less likely to be awarded attorney’s fees than prevailing plaintiffs.
14
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Purpose(s) of Copyright Act
The real requirement in Fogerty is at the end of footnote 19:
We agree that such factors [in Lieb] may be used to guide courts’ discretion, so long as such
factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs
and defendants in an evenhanded manner.
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, n.19 (1994).
The U.S. Supreme Court opinion in Fogerty has three remarks about the purpose(s) of the
Copyright Act. In discussing the old law, which had different rules for awarding attorney’s fees to
prevailing plaintiffs and prevailing defendants, the Court said:
The most common reason advanced in support of the dual approach is that, by awarding
attorney’s fees to prevailing plaintiffs as a matter of course, it encourages litigation of
meritorious claims of copyright infringement. See, e.g., McCulloch v. Albert E. Price, Inc.,
823 F.2d 316, 323 (CA9 1987) (“Because section 505 is intended in part to encourage the
assertion of colorable copyright claims, to deter infringement, and to make the plaintiff whole,
fees are generally awarded to a prevailing plaintiff”) (citations omitted); Diamond v. Am-Law
Publishing Corp., 745 F.2d 142, 148 (CA2 1984) (same). Indeed, respondent relies heavily
on this argument. We think the argument is flawed because it expresses a one-sided view of
the purposes of the Copyright Act. While it is true that one of the goals of the Copyright Act
is to discourage infringement, it is by no means the only goal of that Act.
Fogerty, 510 U.S. at 525-526.
In the second mention of the purposes of the Copyright Act, the Court quoted the
U.S. Constitution:
We reiterated this theme in Feist Publications, Inc. v. Rural Telephone Service Co.,
499 U.S. 340, 349-350, 111 S.Ct. 1282, 1290, 113 L.Ed.2d 358 (1991), where we said:
The primary objective of copyright is not to reward the labor of authors, but “[t]o
promote the Progress of Science and useful Arts.” [U.S. Constitution, Art. I, § 8,
cl. 8. Accord, Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156,
95 S.Ct. 2040, 2044, 45 L.Ed.2d 84 (1975).] To this end, copyright assures
authors the right to their original expression, but encourages others to build freely
upon the ideas and information conveyed by a work. [Harper & Row, 471 U.S.
539, 556-557, 105 S.Ct. 2218, 2228-2229 (1985).]
Because copyright law ultimately serves the purpose of enriching the general public
through access to creative works, it is peculiarly important that the boundaries of copyright
law be demarcated as clearly as possible. To that end, defendants who seek to advance a
variety of meritorious copyright defenses should be encouraged to litigate them to the same
extent that plaintiffs are encouraged to litigate meritorious claims of infringement.
Fogerty, 510 U.S. at 527. The U.S. Supreme Court in Feist and subsequent cases has weakened
copyright protection, and emphasized the importance of the public domain. Citing the
U.S. Constitution does not establish an unambiguous purpose for the Copyright Act. Promoting
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the Progress of knowledge15 can be accomplished in different ways, one of them being strong
property rights for copyright owners, with royalty payments encouraging authors to produce more
text, and with strong remedies for copyright infringement that will discourage copiers. Another
way to promote Progress is to have weak property rights for copyright owners, and tolerate
copying by “free riders” and plagiarists.
In endorsing the Lieb factors, the Court said:
... such factors may be used to guide courts’ discretion, so long as such factors are faithful to
the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an
evenhanded manner.
Fogerty, 510 U.S. at 534, n.19.
Several opinions of the U.S. Courts of Appeals have seized the Supreme Court’s words in
Fogerty about the purpose of the Copyright Act:
• Mitek Holdings, Inc. v. Arce Eng'g Co., 198 F.3d 840, 842-843 (11thCir. 1999) (“The
touchstone of attorney’s fees under § 505 is whether imposition of attorney’s fees will further
the interests of the Copyright Act, i.e., by encouraging the raising of objectively reasonable
claims and defenses, which may serve not only to deter infringement but also to ensure ‘that
the boundaries of copyright law [are] demarcated as clearly as possible’ in order to maximize
the public exposure to valuable works. Fogerty, 510 U.S. at 526-27 ....”). “Thus, in
determining whether to award attorney's fees under § 505, the district court should consider
not whether the losing party can afford to pay the fees but whether imposition of fees will
further the goals of the Copyright Act.” Mitek, at 843.
•
Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116, 122 (2dCir. 2001) (“... the
imposition of a fee award against a copyright holder with an objectively reasonable litigation
position will generally not promote the purposes of the Copyright Act.”).
•
Berkla v. Corel Corp., 302 F.3d 909, 923 (9thCir. 2002) (“It would be inconsistent with the
Copyright Act’s purposes to endorse Corel’s improper appropriation of Berkla’s product by
awarding fees.”).
Intriguingly, the Second Circuit — one of the two most important Circuits for interpreting
copyright law — continues to hold, as explained below, that the principal purpose of the Copyright
Act is to establish legally enforceable property rights for copyright owners, despite the U.S.
Supreme Court condemning that holding in Fogerty, 510 U.S. at 525-526.
The word “Science” meant “knowledge” at the time the Constitution was written. See, e.g.,
Standler, Copyright Protection for Nonfiction or Compilations of Facts in the USA,
http://www.rbs2.com/cfact.pdf , at p. 20 of 87, (Sep 2009).
15
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In January 2001, the U.S. Court of Appeals in New York City wrote:
This emphasis on objective reasonableness is firmly rooted in Fogerty’s admonition that
any factor a court considers in deciding whether to award attorneys' fees must be “faithful to
the purposes of the Copyright Act.” 510 U.S. at 534 n. 19, 114 S.Ct. 1023. The “principle16
purpose of the [Copyright Act] is to encourage the origination of creative works by attaching
enforceable property rights to them.” Diamond v. Am-Law Publ'g Corp., 745 F.2d 142, 147
(2dCir. 1984).
Matthew Bender & Co., Inc. v. West Pub. Co., 240 F.3d 116, 122 (2dCir. 2001).
Quoted with approval in U.S. v. Martignon, 492 F.3d 140, 151-152 (2dCir. 2007).
In October 2007, the U.S. Court of Appeals in New York City remarked on the purpose of the
Copyright Act:
... the “principal purpose” of the Copyright Act, which is “to encourage the origination of
creative works by attaching enforceable property rights to them.” Diamond v. Am-Law Publ'g
Corp., 745 F.2d 142, 147 (2dCir. 1984); see also Veeck v. S. Bldg. Code Congress Int'l Inc.,
241 F.3d 398, 402 (5thCir. 2001) (“The core purpose of copyright law is ‘to secure a fair
return for an author's creative labor’ and thereby ‘to stimulate artistic creativity for the general
public good.’ ”) (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95
S.Ct. 2040, 45 L.Ed.2d 84 (1975)).
Davis v. Blige, 505 F.3d 90, 105 (2dCir. 2007).
The citation of Diamond v. Am-Law by Bender in 2001 and by Davis v. Blige in 2007 shows the
continuing validity of this holding in Diamond in the Second Circuit. Copyright law — together
with patents and trademarks — is part of what is commonly called “intellectual property law”.
The word “property” is appropriate, because a copyright is initially personal property belonging to
an author, which the author can then sell or transfer to a publisher or anyone else. 17 U.S.C. § 201.
There can be no doubt that the Copyright Act does establish legally enforceable property rights.
The presence of other sections of the Copyright Act that favor users of copyrighted works (e.g.,
recognition of fair use in 17 U.S.C. § 107) does not alter the fact that the primary purpose of the
Copyright Act is to establish property rights. The reason or goal for those property rights is to
encourage authors to create new works.
In April 2000, the U.S. Court of Appeals in New York City wrote:
The pertinent purpose of the copyright laws — to encourage the production of creative works
by according authors a property right in their works so that authors will not have to share
profits from their labors with free riders, see, e.g., Mazer v. Stein, 347 U.S. 201, 219, 74 S.Ct.
460, 98 L.Ed. 630 (1954) (“The economic philosophy behind the [copyright] clause ... is the
conviction that encouragement of individual effort by personal gain is the best way to advance
public welfare ....”); ....
SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharmaceuticals, Inc., 211 F.3d 21,
29 (2dCir. 2000).
16
Notice that Diamond misspells “principal” as “principle”.
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In June 1994, the Ninth Circuit held:
Federal copyright laws do not serve this purpose of protecting consumers. They are designed
to protect the property rights of copyright owners. See, e.g., Wheaton v. Peters, 33 U.S.
(8 Pet.) 591, 603, 8 L.Ed. 1055 (1834).
Anderson v. Nidorf, 26 F.3d 100, 102 (9thCir. 1994) (criminal case involving pirated tape
recordings of music). Quoted with approval in Creative Technology, Ltd. v. Aztech System Pte.,
Ltd., 61 F.3d 696, 704 (9thCir. 1995).
Without a clear, unambiguous statement of the purpose(s) of the Copyright Act it is impossible to
follow the command in Fogerty to be “faithful to the purposes of the Copyright Act”. The
Court’s opinion in Fogerty contains slogans, not criteria that are easy for trial judges to apply.
Modern Law in Second, Fourth, & Ninth Circuits
The following cases show how Lieb and Fogerty have been recently interpreted in the Second,
Fourth, and Ninth Circuits.
Second Circuit
Matthew Bender (2001)
In January 2001, the Second Circuit wrote:
In Fogerty v. Fantasy, 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994), the
Supreme Court held that the standard governing the award of attorneys' fees under section 505
should be identical for prevailing plaintiffs and prevailing defendants. In dicta, the Court noted
that “[t]here is no precise rule or formula for making [attorneys' fees] determinations, but
instead equitable discretion should be exercised,” id. (internal quotation marks omitted), and
then proceeded to list several nonexclusive factors courts should consider when exercising this
discretion, namely, “frivolousness, motivation, objective unreasonableness (both in the factual
and in the legal components of the case) and the need in particular circumstances to advance
considerations of compensation and deterrence,” id. at 534 n. 19, 114 S.Ct. 1023 (internal
quotation marks omitted). The Court cautioned, however, that such factors may be used only
“so long as [they] are faithful to the purposes of the Copyright Act.” Id.
Subsequent to Fogerty, several other circuits have accorded the objective reasonableness
factor substantial weight in determinations whether to award attorneys' fees. See Lotus Dev.
Corp. v. Borland Int'l, Inc., 140 F.3d 70, 74 (1stCir. 1998) (affirming denial of fees because
copyright holder's “claims were neither frivolous nor objectively unreasonable”); Harris
Custom Builders Inc. v. Hoffmeyer, 140 F.3d 728, 730-31 (7th Cir.1998) (vacating award of
fees because, inter alia, losing party's claims were objectively reasonable); Budget Cinema,
Inc. v. Watertower Assocs., 81 F.3d 729, 733 (7th Cir.1996) (holding that “the district court
abused its discretion by failing to award attorney's fees based on the objective
unreasonableness of [plaintiff's] complaint”); Maljack Prods., Inc. v. GoodTimes Home
Video Corp., 81 F.3d 881, 890 (9th Cir.1996) (awarding fees because, inter alia, plaintiff's
claims were “factually unreasonable”); Diamond Star Bldg. Corp. v. Freed, 30 F.3d 503, 506
(4th Cir.1994) (affirming award of fees because, inter alia, “the objective reasonableness
factor strongly [Cite as: 240 F.3d at 122] weigh[ed] in favor of awarding attorney's fees and
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costs”). The same is true of the district courts in this Circuit. See, e.g., EMI Catalogue P'ship
v. CBS/Fox Co., 1996 WL 280813, at *2 (S.D.N.Y. May 24, 1996) (holding that copyright
owner's claim was “not so objectively unreasonable as to justify” an award); Williams v.
Crichton, 891 F.Supp. 120, 122 (S.D.N.Y.1994) (awarding fees solely because losing party's
claims were objectively unreasonable); Screenlife Establishment v. Tower Video, Inc., 868
F.Supp. 47, 52 (S.D.N.Y.1994) (same).
This emphasis on objective reasonableness is firmly rooted in Fogerty's admonition that
any factor a court considers in deciding whether to award attorneys' fees must be “faithful to
the purposes of the Copyright Act.” 510 U.S. at 534 n. 19, 114 S.Ct. 1023. The “principle
purpose of the [Copyright Act] is to encourage the origination of creative works by attaching
enforceable property rights to them.” Diamond v. Am-Law Publ'g Corp., 745 F.2d 142, 147
(2d Cir.1984). As such, the imposition of a fee award against a copyright holder with
an objectively reasonable litigation position will generally not promote the purposes of
the Copyright Act.17 See Mitek Holdings, Inc. v. Arce Eng'g Co., 198 F.3d 840, 842-43
(11th Cir.1999) (“The touchstone of attorney's fees under § 505 is whether imposition of
attorney's fees will further the interests of the Copyright Act, i.e., by encouraging the raising
of objectively reasonable claims and defenses, which may serve not only to deter infringement
but also to ensure ‘that the boundaries of copyright law [are] demarcated as clearly as
possible’ in order to maximize the public exposure to valuable works.” (quoting Fogerty, 510
U.S. at 526-27, 114 S.Ct. 1023)); Lotus, 140 F.3d at 75 (“When close infringement cases are
litigated, copyright law benefits from the resulting clarification of the doctrine's boundaries.
But because novel cases require a plaintiff to sue in the first place, the need to encourage
meritorious defenses is a factor that a district court may balance against the potentially chilling
effect of imposing a large fee award on a plaintiff, who, in a particular case, may have
advanced a reasonable, albeit unsuccessful, claim.”). In sum, objective reasonableness is a
factor that should be given substantial weight in determining whether an award of attorneys'
fees is warranted.
Matthew Bender & Co., Inc. v. West Pub. Co., 240 F.3d 116, 121-122 (2dCir. 2001).
This still good law in the Second Circuit. Lava Records, LLC v. Amurao, 354 Fed.Appx. 461,
462 (2dCir. 2009); Bryant v. Media Right Productions, Inc., 603 F.3d 135, 144 (2dCir. 2010)
(“The third factor — objective unreasonableness — should be given substantial weight.
See Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116, 122 (2d Cir.2001).”).
In Aug 2003, a trial court commented:
However, as is evident from the opinions of the Second Circuit involving the analogous issue
of attorneys' fees in copyright cases, a party who has a non-frivolous claim or defense cannot
be said to have brought an action in bad faith, even if that claim or defense is asserted for an
improper purpose. For example, in Matthew Bender & Co., Inc. v. West Pub. Co., 2001 WL
740781, at *3 (S.D.N.Y. July 2, 2001), this Court awarded attorneys' fees because it found
that the defendant was asserting its copyright claims in order to maintain a monopoly in the
publication of judicial opinions. The Circuit Court reversed that decision on the ground that
the legal position asserted was objectively reasonable. Matthew Bender & Co., Inc. v. West
Publishing Co., 41 Fed. Appx. 507, 2002 WL 1583912, at *1 (2d Cir. July 17, 2002). See
also Matthew Bender & Co., Inc. v.. West Pub. Co., 240 F.3d 116, 122 (2d Cir.2001).
Societe Del Hotels Meridien v. LaSalle Hotel Operating Partnership, Not Reported in F.Supp.2d,
2003 WL 21982959 at *1 (S.D.N.Y. 2003).
17
Boldface added by Standler.
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The Sixth Circuit has accepted the holding in Bender: Bridgeport Music, Inc. v. WB Music
Corp., 520 F.3d 588, 593 (6thCir. 2008) (“As this court explained in Rhyme Syndicate [376 F.3d
615, 628 (6thCir. 2004)], ‘[I]t generally does not promote the purposes of the Copyright Act to
award attorney fees to a prevailing defendant when the plaintiff has advanced a reasonable, yet
unsuccessful claim.’ [...] (citing Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116, 122
(2dCir. 2001); Lotus Dev. Corp. v. Borland Int'l, Inc., 140 F.3d 70, 75 (1stCir. 1998)).”);
Fogerty v. MGM Group Holdings, 379 F.3d 348, 357 (6thCir. 2004) (Quoting Bender, 240 F.3d
at 122: “[T]he imposition of a fee award against a copyright holder with an objectively reasonable
litigation position will generally not promote the purposes of the Copyright Act.”).
Crescent Publishing (2001)
In March 2001, the Second Circuit wrote:
Because section 505 establishes the court's ability to shift fees in copyright actions, it is
useful to begin with the text of the statute. Southeastern Cmty. Coll. v. Davis, 442 U.S. 397,
405, 99 S.Ct. 2361, 60 L.Ed.2d 980 (1979) (“It is elementary that ‘[t]he starting point in
every case involving construction of a statute is the language itself.’ ”) (citation omitted).
Section 505 permits a court in its discretion to “allow the recovery of full costs by or against
any party. ... Except as otherwise provided ..., the court may also award a reasonable
attorney's fee to the prevailing party as part of the costs.” 17 U.S.C. § 505 (emphasis added).
This section clearly provides for a fee award to be made to a prevailing party, not directly to its
counsel. Cf. Healey v. Chelsea Res., Ltd., 947 F.2d 611, 624 (2d Cir.1991) (“When a feeshifting statute that authorizes the courts to award attorneys' fees to prevailing parties does not
mention an award against the losing party's attorney, the appropriate inference is that an award
against attorneys is not authorized.”); Neft v. Vidmark, Inc., 923 F.2d 746, 747 (9th
Cir.1991) (finding no indication in the language or legislative history that Congress intended
section 505 to be a means of imposing sanctions on attorneys). The emphasis on
compensating a party for its “full costs” and including a “reasonable attorney's fee” as part of
that cost lends arguable credence to Crescent's argument that the actual billing arrangement
should provide a cap on the amount it could be required to pay.
The text of the statute, however, does not address what should qualify as “reasonable” in
the first instance.FN6 Although the Supreme Court has not specifically held that courts
should apply the lodestar method in calculating fees under section 505, it has indicated that the
lodestar method (emphasizing a comparison to rates of lawyers of similar skill and experience
in the community) is appropriate in calculating the “reasonable” fee permitted under other fee
shifting statutes. See, e.g., Hensley v. Eckerhart, 461 U.S. 424, 433-34, 103 S.Ct. 1933, 76
L.Ed.2d 40 (1983)18 (Civil Rights Attorney's Fees Awards Act, 42 U.S.C. § 1988);
Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 563-68, 106
S.Ct. 3088, 92 L.Ed.2d 439 (1986) (Clean Air Act, 42 U.S.C. § 7604(d)). Because copyright
actions may not always result in high damage awards, for instance if the commercial value of
the work is minimal, and may not always involve parties with substantial financial resources,
an objective measure such as the lodestar seems the most effective method in enabling parties
to retain competent counsel.
18
Quoted below, beginning at page 82.
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FN6. The legislative history to the 1976 Act is sparse, see Fogerty, 510 U.S. at 523-24,
114 S.Ct. 1023, and does not address this issue. The legislative history of the 1909 Act,
from which the attorneys' fee provision of section 505 was carried forward verbatim, is
similarly unilluminating.
Choosing the lodestar method does not end our inquiry. The lodestar method suggests
that the prevailing market rate in [Cite as: 246 F.3d at 151] the community should trump
any agreement for a lower rate made between a client and its private counsel. FN7 Cf.
Blanchard v. Bergeron, 489 U.S. 87, 96, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989) (civil rights);
Getty Petroleum Corp. v. Bartco Petroleum Corp., 858 F.2d 103, 114 (2d Cir.1988) (Lanham
Act). But the emphasis on ascertaining a “reasonable” fee also suggests the absence of a
penalty beyond the punitive or deterrent policies taken into consideration in the decision to
award fees in the first instance. See 4 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 14.10[C], at 14-145 to 14-146 & n. 15 (2000) (“[T]he amount of such fee (as
distinguished from the reason for its award ...) should be based upon the reasonable value of
the services rendered without adding any additional amount by way of penalty.”). The actual
billing arrangement certainly provides a strong indication of what private parties believe is the
“reasonable” fee to be awarded.
FN7. We limit our discussion to agreements between clients and their attorneys who
engage in customary private practice. Different considerations often arise with parties
who appear pro se, see, e.g., Quinto v. Legal Times of Washington, Inc., 511 F.Supp.
579 (D.D.C.1981), or with parties who engage for-profit public interest law firms, see,
e.g., Student Pub. Interest Research Group v. AT & T Bell Labs., 842 F.2d 1436 (3d
Cir.1988). We also do not address situations in which a party and its counsel attempt to
defraud the court through a manipulation of their billing arrangement. See, e.g., Jewish
Employment & Vocational Serv., Inc. v. Pleasantville Educ. Supply Corp., 601 F.Supp.
224 (E.D.Pa.1983).
We are not prepared to declare a per se rule that the actual billing arrangement places a
ceiling on the amount the prevailing party can recover through a fee award under section 505,
especially in light of the district courts' broad discretion in awarding fees. See, e.g., Matthew
Bender & Co. v. West Publ'g Co., 240 F.3d 116, 120-21 (2d Cir.2001). In some instances the
actual billing arrangement may not be “reasonable.” Because we wish to give effect to the
statutory language of the Copyright Act while applying the lodestar method, we conclude that,
for prevailing parties with private counsel, the actual billing arrangement is a significant,
though not necessarily controlling, factor in determining what fee is “reasonable.” FN8 In
weighing this factor, we remind the District Court that in no event should the fees awarded
amount to a windfall for the prevailing party.
FN8. We realize that this decision is contrary to the holding of the Eighth Circuit, which
declared that “the actual fee arrangement between the client and the attorney is
immaterial.” Pinkham v. Camex, Inc., 84 F.3d 292, 294 (8th Cir.1996). Because we
believe that the text of the Copyright Act indicate that the actual fee arrangement is not
only relevant but significant in certain contexts, we respectfully disagree with our sister
Circuit.
Crescent Publishing Group, Inc. v. Playboy Enterprises, 246 F.3d 142, 150-151 (2dCir. 2001).
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A Second Circuit case notes the discretionary nature of attorney fee shifting in copyright cases.
Medforms, Inc. v. Healthcare Management Solutions, Inc., 290 F.3d 98, 117 (2dCir. 2002)
("Attorneys' fees are available to prevailing parties under § 505 of the Copyright Act but are not
automatic. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d 455
(1994).").
Fourth Circuit
Rosciszewski (1993)
In July 1993, the Fourth Circuit adopted the factors cited in Lieb:
As noted by the district court, this court has not heretofore specifically addressed the
standard a district court should apply in exercising its discretion to award attorneys' fees and
costs under § 505. We now take this opportunity to do so. In deciding whether to award
attorneys' fees and costs under § 505, the district court should consider, and make findings
with respect to, the following factors. First, the district court should evaluate the motivation of
the parties. Lieb, 788 F.2d [151] at 156 [(3dCir. 1986)]. While a finding of willful
infringement or bad faith on the part of the opposing party properly may be considered by the
district court, the presence or absence of such motivation is not necessarily dispositive. Id.
Second, the district court should weigh the objective reasonableness of the legal and factual
positions advanced. Id. The court may consider, for example, whether the positions advanced
by the parties were frivolous, on the one hand, or well-grounded in law and fact, on the other.
Third, the court should consider “the need in particular circumstances to advance
considerations of compensation and deterrence.” Id. In evaluating this factor, the court may
find relevant, among other circumstances, the ability of the non-prevailing party to fund an
award. Finally, these enumerated factors are not intended as an exhaustive list; the district
court may also weigh any other relevant factor presented. Id.
Rosciszewski v. Arete Associates, Inc., 1 F.3d 225, 234 (4thCir. 1993).
Diamond Star (1994)
In April 1994, the Fourth Circuit reiterated the factors in Lieb (as stated in Rosciszewski) and noted
the recent approval of these factors by the U.S. Supreme Court in Fogerty:
In Rosciszewski this court adopted the following factors to guide a district court in
determining whether to award attorney's fees and costs to a prevailing party under § 505:
(1) “the motivation of the parties,” (2) “the objective reasonableness of the legal and factual
positions advanced,” (3) “ ‘the need in particular circumstances to advance considerations of
compensation and deterrence,’ ” and (4) “any other relevant factor presented.” Rosciszewski,
1 F.3d at 234 (quoting Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir.1986)); see
also Fogerty, 510 U.S. at 534, n. 19, 114 S.Ct. at 1033, n. 19 (noting that “such factors may
be used to guide courts' discretion, so long as such factors are faithful to the purposes of the
Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded
manner”).
Diamond Star Bldg. Corp. v. Freed, 30 F.3d 503, 505-506 (4thCir. 1994).
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Superior Form Builders v. Dan Chase (1996)
In January 1996, the Fourth Circuit again reiterated the factors in Lieb (as stated in Rosciszewski).
A court deciding whether to award attorney's fees under 17 USC § 505 must consider:
(1) the motivation of the parties;
(2) the objective reasonableness of the legal and factual positions advanced;
(3) the need in particular circumstances to advance considerations of compensation and
deterrence; and
(4) any other relevant factor presented.
See Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 234 (4thCir. 1993).
Chase maintains that he had a reasonable basis to test the legal question of whether
animal mannequins are copyrightable and thus he should not be assessed legal fees for doing
so. He points to the district court's assessment that the case “presented legal questions that
were novel and complex.” We agree that if Chase had pursued these legal issues in good faith,
an award of attorneys fees would constitute an abuse of discretion. But the record in this case
belies the suggestion that Chase maintained his legal position in good faith.
....
The district court recognized that it was not required to award attorneys fees to the
prevailing party and did so only after carefully considering each of the relevant factors. In this
case, it found Chase's conduct “outrageous,” and we conclude that the court's finding is amply
supported. Under such circumstances, we do not find the district court's award in this case to
constitute an abuse of discretion.
Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co., Inc., 74 F.3d 488, 498
(4thCir. 1996), cert. denied, 519 U.S. 809, 117 S.Ct. 53, 136 L.Ed.2d 16 (1996). These factors
from Rosciszewski are still valid law in the Fourth Circuit. Quantum Systems Integrators, Inc. v.
Sprint Nextel Corp., 338 Fed.Appx. 329, 338 (4thCir. 2009).
Ninth Circuit
Jackson v. Axton (1994)
The U.S. Supreme Court decided Fogerty on 1 March 1994. Three months later, the Ninth Circuit
followed the Lieb factors that were endorsed by the Court in Fogerty, with one added factor: “the
degree of success obtained” by the prevailing party. In June 1994, the Ninth Circuit wrote:
The district court denied Appellees attorney's fees, requested pursuant to 17 U.S.C. §
505.[footnote quoting statute omitted] When the district court refused to grant attorney's fees,
controlling authority in this circuit held that attorney's fees were unavailable to a defendant
under § 505 unless the plaintiff's action was frivolous or in bad faith. Cooling Systems &
Flexibles, Inc. v. Stuart Radiator, Inc., 777 F.2d 485, 493 (9th Cir.1985).
Since that time, Cooling Systems has been overruled. Fogerty v. Fantasy, Inc., 510 U.S.
517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). Under Fogerty, courts determining whether to
grant attorney's fees are to exercise “equitable discretion ... ‘in light of the considerations [the
Court has previously] identified.’ ” Id. at 534, 114 S.Ct. at 1033 (quoting Hensley v.
Eckerhart, 461 U.S. 424, 436-37, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983)). Such
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considerations include, but might not be limited to, [1] the degree of success obtained,
Hensley,19 461 U.S. at 436, 103 S.Ct. at 1941; [2] frivolousness; [3] motivation;
[4] objective unreasonableness (both in the factual and legal arguments in the case); and
[5] the need in particular circumstances to advance considerations of compensation and
deterrence. 510 U.S. at 534, n. 19, 114 S.Ct. at 1033 n. 19. Courts should keep in mind the
purposes of the Copyright Act (to promote creativity for the public good) and apply the
factors in an evenhanded manner to prevailing plaintiffs and prevailing defendants alike.
510 U.S. at 525, 114 S.Ct. at 1028.
We remand Appellees' attorney's fee claim. Fogerty gives the district court greater
discretion than did Cooling Systems. See id. at ----, 114 S.Ct. at 1033. The district court
should be able to exercise that discretion under the present standard. Id. On remand the
district court should also consider whether Appellees should be granted attorney's fees
pursuant to § 505 for work done on this appeal.
Jackson v. Axton, 25 F.3d 884, 890 (9thCir. 1994).
Although Jackson v. Axton is 16 years old, it remains good law. The five factors in Jackson v.
Axton were quoted with approval in
• Halicki Films, LLC v. Sanderson Sales and Marketing, 547 F.3d 1213, 1230 (9thCir. 2008);
• Wall Data Inc. v. Los Angeles County Sheriff's Dept., 447 F.3d 769, 787 (9thCir. 2006) (cites
Smith v. Jackson, 84 F.3d 1213, 1221 (9thCir. 1996), which, in turn, cites Jackson v. Axton,
supra);
• Columbia Pictures Television, Inc. v. Krypton Broadcasting of Birmingham, Inc., 259 F.3d
1186, 1197 (9thCir. 2001);
• Entertainment Research Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d 1211, 1229
(9thCir. 1997);
• Metcalf v. Bochco, 200 Fed.Appx. 635, 640 (9thCir. 2006).
Fogerty after remand (1996)
After remand of Fogerty from the U.S. Supreme Court, the trial court awarded a whopping
$ 1,347,519 in attorney’s fees to the prevailing defendant.20 The U.S. Court of Appeals in
California affirmed this award in August 1996, and mentioned two additional considerations for an
award of attorney’s fees: “the chilling effect of attorney's fees may be too great or impose an
inequitable burden on an impecunious plaintiff”.
[Cite as: 94 F.3d at 556] ....
19
Quoted below, beginning at page 82.
The litigation in this case began sometime before Oct 1986, when a First Amended Complaint
was filed. In late 1988, a jury found for defendant Fogerty, but the judge denied attorney’s fees.
Fogerty appealed to the Ninth Circuit and then to the U.S. Supreme Court. The Court overruled the
Ninth Circuit’s rule. On remand, the trial court awarded attorney’s fees to Fogerty, and then Fantasy
appealed to the Ninth Circuit, which, as explained in the quoted text below, affirmed the award of
attorney’s fees to Fogerty. This affirmance came at least ten years after this case began. The Court of
Appeals awarded Fogerty more attorney’s fees for the final appeal. 94 F.3d at 561.
20
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Fogerty moved for a reasonable attorney's fee pursuant to 17 U.S.C. § 505.[footnote
quoting § 505 omitted] The district court denied the request on the ground that Fantasy's
lawsuit was neither frivolous nor prosecuted in bad faith and our then-existing precedent
precluded an award of fees in the absence of one or the other. See Cooling Systems &
Flexibles, Inc. v. Stuart Radiator, Inc., 777 F.2d 485, 493 (9th Cir.1985). We affirmed for
the same reason, Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1533 (9th Cir.1993) [ Fogerty I ],
but the Supreme Court reversed and remanded in Fogerty v. Fantasy, Inc., 510 U.S. 517, 114
S.Ct. 1023, 127 L.Ed.2d 455 (1994) [ Fogerty II ]. We then remanded to the district court for
further proceedings consistent with Fogerty II. Fantasy, Inc. v. Fogerty, 21 F.3d 354 (9th
Cir.1994) [ Fogerty III ].
On remand, the district court granted Fogerty's motion and, after reviewing extensive
billing records, awarded $1,347,519.15. Its decision was based on several factors. First,
Fogerty's vindication of his copyright in “The Old Man Down the Road” secured the public's
access to an original work of authorship and paved the way for future original compositionsby Fogerty and others-in the same distinctive “Swamp Rock” style and genre. Thus, the
district court reasoned, Fogerty's defense was the type of defense that furthers the purposes
underlying the Copyright Act and therefore should be encouraged through a fee award.
Further, the district court found that a fee award was appropriate to help restore to Fogerty
some of the lost value of the copyright he was forced to defend. In addition, Fogerty was a
defendant author and prevailed on the merits rather than on a technical defense, such as the
statute of limitations, laches, or the copyright registration requirements. Finally, the benefit
conferred by Fogerty's successful defense was not slight or insubstantial relative to the
costs of litigation, nor would the fee award have too great a chilling effect or impose an
inequitable burden on Fantasy, which was not an impecunious plaintiff.21
Fogerty also sought interest to account for the lost use of the money paid to his lawyers
over the years. While the district court awarded Fogerty almost all of what he asked for in
fees, it declined to award interest. Fantasy timely appeals the fee award; Fogerty timely crossappeals the refusal to award interest. [The trial court said awarding interest on attorney’s fees
“isn’t the normal practice”, and the Court of Appeals found no reason to disturb the trial
court’s discretion. 94 F.3d at 561]
II
We review the district court's decision to award attorney's fees under the Copyright Act
for an abuse of discretion, Maljack Productions v. GoodTimes Home Video Corp., 81 F.3d
881, 889 (9th Cir.1996), but “any elements of legal analysis and statutory interpretation which
figure in the district court's decision are reviewable de novo,” Hall v. Bolger, 768 F.2d 1148,
1150 (9th Cir.1985). “A district court's fee award does not constitute an abuse of discretion
unless it is based on an inaccurate view of the law or a clearly erroneous finding of fact.”
Schwarz v. Secretary of Health & Human Serv., 73 F.3d 895, 900 (9th Cir.1995) (internal
quotations and citation omitted).
III
Fantasy contends that the district court had no discretion to award fees to Fogerty because
Fantasy conducted a “good faith” and “faultless” lawsuit upon reasonable factual and legal
grounds, or to put it somewhat differently, because Fantasy was “blameless.” According to
21
Boldface added by Standler.
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Fantasy, once the district court could find no fault in the way Fantasy conducted this case, that
should have been the end of the matter. To award fees nevertheless, Fantasy contends, is
incompatible with Fogerty II 's rule of evenhandedness, [Cite as: 94 F.3d at 557] as
evenhandedness cannot be achieved by rewarding each side for qualities that adhere only to
that side. To do so, as Fantasy contends the district court did here, is tantamount to the British
Rule's automatic fee award to the victor-which Fogerty II rejected. Rather, it submits, the
court's discretion may only be informed by factors having to do with culpability that are
capable of being applied equally to prevailing plaintiffs and prevailing defendants.
Fogerty, on the other hand, contends that Fogerty II focuses a district court's discretion on
whether the prevailing party has furthered the purposes of the Copyright Act in litigating the
action to a successful conclusion; under that standard, the district court was well within its
discretion in finding that his successful defense of this action served important copyright
policies. He also argues that the evenhanded approach does not mean that only “neutral”
factors may be considered in the exercise of the court's discretion since, contrary to Fantasy's
view, the Court itself recognized that somewhat different policies of the Copyright Act may be
furthered when either plaintiffs or defendants prevail. Fogerty points out that the Court
specifically observed that his successful defense of this action “increased public exposure to a
musical work that could, as a result, lead to further creative pieces,” Fogerty II, 510 U.S. at
527, 114 S.Ct. at 1030, and maintains that the fact that this factor happened to tip in Fogerty's
favor as a prevailing defendant in this case should not prevent it from being considered at all.
A
In Fogerty II, the Supreme Court granted certiorari to resolve a conflict among the
circuits concerning “what standards should inform a court's decision to award attorney's fees
to a prevailing defendant in a copyright infringement action....” Id. at 519, 114 S.Ct. at 1026.
The Court rejected both the “dual” standard that we had followed and applied in Fogerty Iwhereby prevailing plaintiffs generally were awarded attorney's fees as a matter of course,
while prevailing defendants had to show that the original lawsuit was frivolous or brought in
bad faith-and the “British Rule” for which Fogerty argued-whereby the prevailing party
(whether plaintiff or defendant) automatically receives fees. The Court instead adopted the
“evenhanded” approach exemplified by the Third Circuit's opinion in Lieb v. Topstone Indus.,
Inc., 788 F.2d 151 (3d Cir.1986).FN2
FN2. In Lieb, the defendant won on summary judgment and requested attorney's fees,
contending that the copyright infringement claim was filed in bad faith, was frivolous,
and should not have been brought after reasonable investigation. The district court denied
the request without discussion. The Third Circuit remanded for a statement of reasons,
but in doing so explained that “we do not require bad faith, nor do we mandate an
allowance of fees as a concomitant of prevailing in every case, but we do favor an
evenhanded approach.” Id. at 156. The court went on to identify a number of factors
which should play a part in the district courts' discretion, including “frivolousness,
motivation, objective unreasonableness (both in the factual and in the legal components of
the case) and the need in particular circumstances to advance considerations of
compensation and deterrence,” but expressly declined to limit the factors to those
mentioned. Id.
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The Court held that
Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney's fees
are to be awarded to prevailing parties only as a matter of the court's discretion. “There is
no precise rule or formula for making these determinations,” but instead equitable
discretion should be exercised “in light of the considerations we have identified.”
Fogerty II, 510 U.S. at 534, 114 S.Ct. at 1033 (quoting Hensley v. Eckerhart, 461 U.S. 424,
436-437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983). Considerations discussed by the
Court include the Copyright Act's primary objective, “to encourage the production of original
literary, artistic, and musical expression for the good of the public,” id. at 524, 114 S.Ct. at
1028; the fact that defendants as well as plaintiffs may hold copyrights, id. at 525-527, 114
S.Ct. at 1029, and “run the gamut from corporate behemoths to starving artists,” id. at 524,
114 S.Ct. at 1028 (internal quotations and citation omitted); the need to encourage “defendants
who seek to advance a variety of meritorious copyright defenses ... to litigate them to the same
extent that [Cite as: 94 F.3d at 558] plaintiffs are encouraged to litigate meritorious claims
of infringement,” id. at 527, 114 S.Ct. at 1030; and the fact that “a successful defense of a
copyright infringement action may further the policies of the Copyright Act every bit as much
as a successful prosecution of an infringement claim by the holder of a copyright,” id.
The district court's decision was informed by these considerations, but Fantasy argues
that it failed to appreciate the culpability underpinnings of the evenhanded rule and to apply the
Lieb factors, which Fantasy contends are fault-based and were embraced by the Supreme
Court in Fogerty II. However, neither Lieb nor the Court's discussion of the evenhanded rule
and the Lieb factors in Fogerty II suggests that discretion to award fees to prevailing
defendants is constrained by the plaintiff's culpability, or is limited to the specific factors
identified in Lieb. As the Court's discussion in footnote 19 indicates, courts following the
evenhanded standard have suggested several “nonexclusive factors to guide courts'
discretion.” Id. at 534 n. 19, 114 S.Ct. at 1033 n. 19. By way of example, footnote 19 refers
to the factors listed by the Third Circuit in Lieb (frivolousness, motivation, objective
unreasonableness, and considerations of compensation and deterrence),FN3 and says of
them: “We agree that such factors may be used to guide courts' discretion, so long as such
factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs
and defendants in an evenhanded manner.” Id. Thus, while courts may take the Lieb factors
into account, they are “nonexclusive.” Even so, courts may not rely on the Lieb factors if
they are not “faithful to the purposes of the Copyright Act.” Id. Faithfulness to the purposes
of the Copyright Act is, therefore, the pivotal criterion.
FN3. See note 2, supra. [citing the factors in Lieb]
By the same token, a court's discretion may be influenced by the plaintiff's culpability in
bringing or pursuing the action, but blameworthiness is not a prerequisite to awarding fees to
a prevailing defendant. Fantasy made a similar argument in the Supreme Court, asserting that
Congress must have intended attorney's fees for prevailing defendants only when the
plaintiff's claim was frivolous or brought with a vexatious purpose because that was the
clearly established law when § 505 was enacted. Id. at 527-529, 114 S.Ct. at 1030. The Court
disagreed. In doing so, it singled out the statement in Breffort v. I Had a Ball Co., 271
F.Supp. 623 (S.D.N.Y.1967), that “if an award is to be made at all [to a prevailing defendant],
it represents a penalty imposed upon the plaintiff for institution of a baseless, frivolous, or
unreasonable suit, or one instituted in bad faith,” id. at 627, as “too narrow a view of the
purposes of the Copyright Act because it fails to adequately consider the important role played
by copyright defendants,” Fogerty II, 510 U.S. at 532-533 n. 18, 114 S.Ct. at 1032 n. 18. In
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the face of this declaration, we cannot fault the district court for awarding fees to Fogerty as a
prevailing defendant without first finding that Fantasy as the plaintiff was blameworthy.
Although we have not squarely addressed this question before, our post- Fogerty II
opinions have recognized that a plaintiff's culpability is no longer required, that the Lieb
factors may be considered but are not exclusive and need not all be met, and that attorney's fee
awards to prevailing defendants are within the district court's discretion if they further the
purposes of the Copyright Act and are evenhandedly applied. In Apple Computer, Inc. v.
Microsoft Corp., 35 F.3d 1435 (9th Cir.1994), cert. denied, 513 U.S. 1184, 115 S.Ct. 1176,
130 L.Ed.2d 1129 (1995), for instance, we affirmed summary judgment for the defendants
but remanded for the district court to reconsider its refusal to award attorney's fees in light of
Fogerty II, explaining that “the district court now has greater discretion to award attorney's
fees to prevailing defendants.” Id. at 1448. We rejected the plaintiff's contention that “remand
is unnecessary because the district court also made findings that require the denial of attorney's
fees under the criteria set forth in Lieb,” concluding that “[t]he district court clearly indicated
that it might be inclined to award attorney's fees if a finding of bad faith or frivolousness were
no longer required, and it invited [the defendants] to [Cite as: 94 F.3d at 559] renew their
motions should the law in this circuit change.” Id; see also Smith v. Jackson, 84 F.3d 1213,
1221 (9th Cir.1996) (award upheld even though district court found no frivolousness but
weighed many relevant considerations and didn't commit clear error of judgment). In Jackson
v. Axton, 25 F.3d 884 (9th Cir.1994), we affirmed a summary judgment for the defendant and
remanded for reconsideration of the refusal to award fees under Fogerty II, explaining that
under Fogerty II, courts deciding whether to grant attorney's fees to a prevailing party are to
exercise “equitable discretion” in light of the considerations the Court identified, the degree of
success obtained, the Lieb factors, and the purposes of the Copyright Act; and are to apply
such factors in an evenhanded manner. Id. at 890. We have been careful to indicate that such
factors are only “some” of the factors to consider, and that courts are not limited to
considering them. See Maljack Productions, Inc., 81 F.3d at 889; Jackson, 25 F.3d at 890.
And in Historical Research v. Cabral, 80 F.3d 377 (9th Cir.1996), we concluded that, under
Fogerty II, “ ‘exceptional circumstances' are not a prerequisite to an award of attorneys fees;
district courts may freely award fees, as long as they treat prevailing plaintiffs and prevailing
defendants alike and seek to promote the Copyright Act's objectives.” Id. at 378 (citations
omitted); see also Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9th Cir.1996)
(reiterating importance of promoting the Copyright Act's objectives in considering attorney's
fee awards).
We also have not previously been asked to decide whether the factors relied upon by a
district court in awarding fees to a prevailing copyright defendant must be exactly capable of
being applied to a prevailing plaintiff in order to satisfy the evenhanded rule. However,
Fogerty II has already answered this question. Fantasy argues that the point of
evenhandedness is to eliminate as the premise for any fee award any factor which cannot
occur on both sides of the litigation equation. But we believe this asks more of
“evenhandedness” than Fogerty II expects. Fantasy's argument is just another way of making
two points rejected by the Supreme Court-that for a prevailing defendant to qualify for fees the
plaintiff must be blameworthy because whenever a plaintiff prevails the defendant, by
definition, is blameworthy; and that to award fees when the plaintiff isn't blameworthy chills
enforcement of the copyright laws. Of the latter the Court states:
[T]he argument is flawed because it expresses a one-sided view of the purposes of the
Copyright Act. While it is true that one of the goals of the Copyright Act is to discourage
infringement, it is by no means the only goal of that Act. In the first place, it is by no
means always the case that the plaintiff in an infringement action is the only holder of a
copyright; often times, defendants hold copyrights too, as exemplified in the case at hand.
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More importantly, the policies served by the Copyright Act are more complex,
more measured, than simply maximizing the number of meritorious suits for copyright
infringement.
Fogerty II, 510 U.S. at 526, 114 S.Ct. at 1029 (internal citation omitted). And of the former,
the Court says, speaking directly to this case:
In the case before us, the successful defense of “The Old Man Down the Road”
increased public exposure to a musical work that could, as a result, lead to further creative
pieces. Thus a successful defense of a copyright infringement action may further the
policies of the Copyright Act every bit as much as a successful prosecution of an
infringement claim by the holder of a copyright.
Id. at 527, 114 S.Ct. at 1030. We cannot, therefore, say that the district court erred by relying
on factors identified by the Supreme Court which in this case led it to conclude that Fogerty's
defense sufficiently furthered the purposes of the Copyright Act to warrant an award of
attorney's fees.
Nor do we agree with Fantasy that the district court's award of fees imported the British
Rule through the back door. The British Rule requires an award of attorney's fees to every
prevailing party, regardless of the circumstances; nothing is left for the court to decide except
how much. However, [Cite as: 94 F.3d at 560] Fogerty II makes clear that attorney's fees
are within the courts' discretion. The district court recognized this point and, as it concluded,
the reasoning upon which it relied does not lead to compulsory fee awards to prevailing
copyright defendants: copyright claims do not always involve defendant authors, let alone
defendant authors accused of plagiarizing themselves, and do not always implicate the
ultimate interests of copyright; copyright defendants do not always reach the merits,
prevailing instead on technical defenses; defenses may be slight or insubstantial relative to the
costs of litigation; the chilling effect of attorney's fees may be too great or impose an
inequitable burden on an impecunious plaintiff;22 and each case will turn on its own
particular facts and equities.
In sum, evenhandedness means that courts should begin their consideration of attorney's
fees in a copyright action with an evenly balanced scale, without regard to whether the plaintiff
or defendant prevails, and thereafter determine entitlement without weighting the scales in
advance one way or the other. Courts may look to the nonexclusive Lieb factors as guides
and may apply them so long as they are consistent with the purposes of the Copyright Act and
are applied evenly to prevailing plaintiffs and defendants; a finding of bad faith, frivolous or
vexatious conduct is no longer required; and awarding attorney's fees to a prevailing defendant
is within the sound discretion of the district court informed by the policies of the Copyright
Act.
Since the reasons given by the district court in this case are well-founded in the record
and are in keeping with the purposes of the Copyright Act, the court acted within its discretion
in awarding a reasonable attorney's fee to Fogerty.
Fantasy, Inc. v. Fogerty, 94 F.3d 553, 556-560 (9thCir. 1996).
Boldface added by Standler. Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763, 766 (9thCir. 2003)
(“The Ninth Circuit has added as additional considerations: the degree of success obtained, the
purposes of the Copyright Act, and whether the chilling effect of attorney's fees may be too great or
impose an inequitable burden on an impecunious plaintiff. Fantasy, Inc. v. Fogerty, 94 F.3d 553, 55960 (9thCir. 1996).”).
22
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These factors were cited in Stewart Title of California, Inc. v. Fidelity Nat. Title Co., 279
Fed.Appx. 473, 476 (9thCir. 2008); Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 F.3d
1140, 1147 (9thCir. 2003); Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763, 766 (9thCir. 2003).
miscellaneous Ninth Circuit
•
Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9thCir. 1996) (“In this case, we are
particularly concerned that the small award for damages [$375] in this case is insufficient to
deter future copyright infringements such as the one at issue here.”).
•
Brod v. General Pub. Group, Inc., 32 Fed.Appx. 231, 236 (9thCir. 2002) (“Third, the need
for compensation and deterrence is not compelling. While Collins may not be a ‘corporate
behemoth,’ neither is Brod. Fogerty, 510 U.S. at 524, 114 S.Ct. 1023. We will not
discourage ‘starving artists’ from defending copyrights in original works due to the threat of
attorney's fees. Id. The District Court was correct to hold that the goals of the Copyright Act
do not necessitate an award of attorney's fees.”).
A software manufacturer, Corel, successfully defended a copyright infringement case — the
copyright claims were dismissed on summary judgment, Berkla v. Corel Corp., 66 F.Supp.2d
1129 (E.D.Cal. 1999) — but the trial court refused to award attorney’s fees to the prevailing
defendant. The argument seems to be that, although plaintiff could not prove copyright
infringement by Corel, there was evidence of misappropriation of plaintiff's intellectual property by
Corel. In August 2002, the Ninth Circuit affirmed the denial of attorney’s fees to Corel:
Corel argues that its successful defense of Berkla's infringement claims on the ground
that Berkla's images contained no protectable expression furthered a primary objective of the
Copyright Act — to “promote the Progress of Science and useful Arts” by “encourag[ing]
others to build freely upon the ideas and information conveyed by a work.” Feist Publ'ns,
Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349-50, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991).
It contends that its defense of this suit fostered the important concept of distinguishing
unprotectable ideas from protectable expression.
We find this argument unpersuasive and agree with the district court that Corel's behavior
in this case did not advance the purposes of the Copyright Act. In denying fees, the district
court found that Corel's use of Berkla's nozzles to model its own Photo Paint images, while
not technically violating the virtual identity standard of copyright infringement, nevertheless
constituted a highly questionable business practice.23 The district court emphasized:
Most important ... is the fact that the jury found Corel had acted improperly in
utilizing Berkla's databases for modeling of its own. While the jury's finding of
maliciousness or oppressiveness or fraud on the part of Corel in breaching Berkla's
confidence could be questioned, Corel has chosen not to contest these findings in
post-trial motions. The jury's unaltered liability verdict speaks loudly in
proclaiming that Corel should not be rewarded for prevailing on a finding regarding
copyright standard of proof in light of the found misdeeds on related issues.
23
Boldface added by Standler.
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It would be inconsistent with the Copyright Act's purposes to endorse Corel's improper
appropriation of Berkla's product by awarding fees.[footnote omitted]
Berkla v. Corel Corp., 302 F.3d 909, 923 (9thCir. 2002).
The Ninth Circuit concluded:
Thus, Corel was not a blameless victim in this lawsuit — its admittedly illegal behavior
prompted Berkla's complaint. Corel's attempt to paint Berkla as a litigious schemer who “set
up” Corel obscures Corel's underlying wrongful conduct and is insufficient to warrant
overturning the district court's denial of fees. We conclude that the district court did not abuse
its discretion in denying Corel attorney's fees on the copyright claim.
Berkla v. Corel Corp., 302 F.3d 909, 924 (9thCir. 2002).
In September 2009 the U.S. Court of Appeals in California wrote:
¶17. Given the district court's detailed analysis and the fact that it considered the relevant
factors in assessing the reasonableness of the attorneys' fee awards, we cannot conclude that
the district court abused its discretion. Although Archives technically prevailed against
Julien's, we acknowledge that Archives' limited success (essentially nominal damages) would
have supported an award of no fees (or significantly lower fees). See Farrar v. Hobby, 506
U.S. 103, 115, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) ( “In some circumstances, even a
plaintiff who formally ‘prevails' ... should receive no attorney's fees at all. A plaintiff who
seeks compensatory damages but receives no more than nominal damages is often such a
prevailing party.”). “[A]ttorney's fees may be properly denied where the plaintiff's success on
a legal claim can be characterized as purely technical or de minimis.” Park, 464 F.3d [1025]
at 1036 [(9thCir. 2006)]24 (alteration, citations and internal quotation marks omitted). Such is
the case here. However, when awarding attorneys' fees under the Copyright Act, “district
courts are given wide latitude to exercise ‘equitable discretion.’ ” Entm't Research Group, Inc.
v. Genesis Creative Group, Inc., 122 F.3d 1211, 1229 (9th Cir.1997) (citing Fogerty v.
Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)). Although an
award of attorneys' fees that is ten times the amount recovered in damages seems
unreasonable under the circumstances of this case, the district court knows the history of the
litigation, has observed the conduct of the parties throughout, and is in a better position to
weigh the equitable factors. Here, the district court correctly identified the relevant factors,
Wall Data Inc., 447 F.3d at 787, and considered “the most critical factor[:] the degree of
success obtained.” See Hensley v. Eckerhart, 461 U.S. 424, 436, 103 S.Ct. 1933, 76 L.Ed.2d
40 (1983) (vacating and remanding a fee award where the district court failed to “properly
consider the relationship between the extent of success and the amount of the fee award”).25
Given the district court's analysis, we cannot say that we have a “definite and firm conviction
that the [district court] committed a clear error of judgment in the conclusion it reached upon a
weighing of the relevant factors.” Smith, 84 F.3d at 1221 (citation omitted).
Milton H. Greene Archives, Inc. v. Julien's Auction House LLC, 345 Fed.Appx. 244, 249, ¶17
(9thCir. 2009). One dissenting judge would have vacated the $340,000 attorney's fee award
because of misconduct by plaintiff's attorneys (e.g., “flagrant greed,” “systematically engag[ing] in
24 Park is a case arising under the Individuals with Disabilities Education Act, and has nothing to
do with copyright infringement. But this rule in Park is broadly applied to fee-shifting in many kinds
of cases, see page 77, below.
25
Quoted below, beginning at page 82.
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conduct that caused the case to be blown out of proportion,” “embarrassing sloppiness,”
“miscit[ing] the law,” and incorrectly characterizing the district court's own order). Ibid. at 250.
Modern Law in the Seventh Circuit
NLFC v. Devcom (N.D.Ill. 1996)
In January 1996, a trial court in Illinois awarded $ 165,562 in attorney's fees to a prevailing
defendant.
[The U.S. Supreme Court in] Fogerty directs lower courts to exercise ‘equitable discretion’ in
light of several nonexclusive factors including “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the need in
particular circumstances to advance considerations of compensation and deterrence.” Fogerty,
510 U.S. at 534, n. 19, 114 S.Ct. at 1033 n. 19, quoting Lieb v. Topstone Industries, Inc.,
788 F.2d 151, 156 (3d Cir.1986).[footnote omitted] Post- Fogerty caselaw has taken into
consideration other relevant factors such as the prevailing party's degree of success. See
Diamond Star Bldg. Corp. v. Sussex Co. Builders, Inc., 21 F.3d 59 (4th Cir.1994).
Once liability is established, the prevailing party must prove that the costs and fees
requested are reasonable. .... Caselaw also provides guidance as to the reasonableness of the
amount. Several factors may be considered at this stage: relative complexity of the litigation,
relative financial strength of the parties and bad faith. See Lieb, 788 F.2d at 156. At base, the
sum recoverable may not exceed that charged the client but the award does not have to equal
that amount. Lieb, 788 F.2d at 156.
NLFC, Inc. v. Devcom Mid-America, Inc., 916 F.Supp. 751, 756-757 (N.D.Ill. 1996).
Having found NLFC liable under § 505 for prevailing party Devcom's costs and legal
fees, we must now consider whether the amounts claimed by Devcom were necessary and
reasonable. Devcom, as the applicant, bears the burden of providing sufficient evidence that
the rates charged by Golden & Rosenbaum were in line with those prevailing in the
community for similar services by lawyers of reasonably comparable skill, experience and
reputation. See Blum v. Stenson, 465 U.S. 886, 895-96, 104 S.Ct. 1541, 1544-47, 79 L.Ed.2d
891 (1984).26 In addition, Devcom bears the burden of establishing the number of hours
reasonably expended on the case. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933,
1939, 76 L.Ed.2d 40 (1983).27 While failure to present sufficient records can result in
reduction of hours requested, the critical determination is whether the documentation, when
taken in context, sufficiently identifies what work was done. Gekas v. Attorney Registration &
Disciplinary Comm'n, 793 F.2d 846, 853 (7thCir. 1986).
NLFC, Inc. v. Devcom Mid-America, Inc., 916 F.Supp. 751, 760 (N.D.Ill. 1996).
26
Quoted below, beginning at page 85.
27
Quoted below, beginning at page 82.
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Budget Cinema (1996)
In April 1996, the Seventh Circuit reversed a trial court’s denial of attorney’s fees to prevailing
defendants, because the trial court used the wrong criteria for determining whether to award
attorney’s fees to a prevailing party:
The Copyright Act provides that “the court may ... award a reasonable attorney's fee to
the prevailing party as part of the costs.” 17 U.S.C. § 505. Prior to 1994, several courts of
appeals, including ours, adopted a dual standard under Section 505 whereby a greater burden
was placed upon prevailing defendants than on prevailing plaintiffs to recover attorney's fees.
Prevailing defendants in copyright cases had to show bad faith or frivolousness to recover
attorney's fees. Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1022 (7th Cir.1991),
certiorari denied, 502 U.S. 861, 112 S.Ct. 181, 116 L.Ed.2d 143. However, in 1994 the
Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455,
rejected the dual standard and ruled that prevailing plaintiffs and prevailing defendants are to
be treated alike under Section 505. The Court stated that no precise formula governs the
determination, but instead equitable discretion should be exercised. Id. at 1033. It noted
several nonexclusive factors to guide courts' discretion: frivolousness, motivation, objective
unreasonableness (both factual and legal components), and the need in particular
circumstances to advance considerations of compensation and deterrence. Id. at 1033 n. 19.
We endorse these factors along with the other courts of appeals that have applied Section 505
post-Fogerty. Superior Form Builders, Inc. v. Chase Taxidermy Supply Co., 74 F.3d 488,
498 (4th Cir.1996); Knitwaves, Inc. v. Lollytogs, Ltd., 71 F.3d 996, 1011-1012 (2dCir.
1995); Mary Ellen Enters. v. Camex, Inc., 68 F.3d 1065, 1072 (8thCir. 1995); Jackson v.
Axton, 25 F.3d 884, 890 (9thCir. 1994). We will reverse a district court's determination if it
either applied the wrong legal standard or abused its discretion. Knitwaves, 71 F.3d at 1012.
Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 731 (7thCir. 1996).
Notice the Seventh Circuit’s acceptance of the factors in Fogerty and the Fourth Circuit’s factors in
Superior Form Builders, each of which can be traced back to Lieb.
Applying the appropriate factors, we conclude that defendants were entitled to an award
of reasonable attorney's fees under Section 505. Although there is little indication of actual
bad faith on the part of Budget, the record demonstrates quite clearly that Budget's case against
defendants was objectively unreasonable, both factually and legally.
Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 732 (7thCir. 1996).
The Court of Appeals concluded:
Although we do not hold that attorney's fees must be awarded under Section 505 in every
case, we are convinced that the district court abused its discretion by failing to award attorney's
fees based on the objective unreasonableness of Budget's complaint. Accord Diamond Star
Bldg. Corp. v. Freed, 30 F.3d 503, 507 (4thCir. 1994). The judgment denying the award of
attorney's fees is reversed and the case remanded for a determination of these defendants'
reasonable attorney's fees.
Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 733 (7thCir. 1996).
Note the acceptance of the Fourth Circuit’s criteria, which can be traced back to Lieb.
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FASA v. Playmates Toys (1997)
In March 1997, Judge Diane Wood of the Seventh Circuit wrote:
Playmates, which reports to this court that it spent in excess of $2.5 million defending
itself against FASA's accusations, argues that the district court's remarks explaining why he
was denying attorneys' fees reveal a mistake of law on the standard to be applied. In Fogerty,
it argues, the Supreme Court made clear that section 505 of the Copyright Act, 17 U.S.C. §
505, does not require a prevailing party to prove either bad faith or exceptional circumstances
in order to obtain its attorneys' fees. For its part, FASA does not disagree with that
characterization of Fogerty, but it argues that the district court's mention of bad faith and
exceptional circumstances pertained only to the Lanham Act ground for attorneys' fees, based
on 15 U.S.C. § 1117. The citations to Fogerty and BASF Corp. v. Old World Trading Co.,
Inc., 41 F.3d 1081 (7th Cir.1994), and the allusions to decisions in the Second and Third
Circuits (which FASA speculates included Lieb v. Topstone Industries, 788 F.2d 151 (3d
Cir.1986) (developing approach later taken by the Supreme Court in Fogerty ) and Diamond
v. Am-Law Publishing Corp., 745 F.2d 142 (2d Cir.1984) (concluding that plaintiff's
subjective bad faith was immaterial)), indicate to FASA that the court both knew of and
applied the proper standard insofar as § 505 was at issue. Playmates responds that even if the
district court properly understood [Cite as: 108 F.3d at 143] that Fogerty provides the
governing standard, it abused its discretion in denying the fee petition in light of all the
circumstances of the litigation (which both parties describe in detail in their briefs).
As Playmates points out, the standards for granting attorneys' fees to a prevailing party
differ considerably between the Lanham Act, which governed the trademark parts of this
litigation, and the Copyright Act. After setting forth what may be recovered as damages in a
Lanham Act case for violation of a right held by a registered trademark holder, 15 U.S.C. §
1117 states that “[t]he court in exceptional cases may award reasonable attorney fees to the
prevailing party.” This court has observed that the “exceptional” cases to which the statute
refers encompass “cases in which the acts of infringement are ‘malicious, fraudulent,
deliberate or willful.’ ” BASF Corp., 41 F.3d at 1099 (citation omitted). Distinguishing
between cases in which the plaintiff prevails and those in which the defendant prevails, the
Fourth Circuit has held that a finding of bad faith on the part of a plaintiff is not necessary for
a prevailing defendant to prove that the case is “exceptional,” but a prevailing plaintiff would
need to show that a defendant acted in bad faith in order to succeed. Scotch Whisky Ass'n v.
Majestic Distilling Co., Inc., 958 F.2d 594, 599 (4th Cir.1992).
The Supreme Court took a turn away from a mode of analysis that distinguishes between
prevailing plaintiffs and prevailing defendants when it considered the Copyright Act's
attorneys' fee provision in Fogerty v. Fantasy, Inc., supra, which may call into question the
distinction that the Fourth Circuit adopted in Scotch Whisky. It remains true, however, that the
language of the Lanham Act requires some kind of exceptional circumstances, and we see no
reason why the bad faith of one of the parties may not be part of those exceptional
circumstances. Section 505 of the Copyright Act stands in marked contrast to its Lanham Act
counterpart:
In any civil action under this title, the court in its discretion may allow the recovery of full
costs by or against any party other than the United States or an officer thereof. Except as
otherwise provided by this title, the court may also award a reasonable attorney's fee to
the prevailing party as part of the costs.
17 U.S.C. § 505. In Fogerty, the Supreme Court expressly approved the “evenhanded”
approach to § 505 that the Third Circuit had adopted, citing Lieb with approval; it characterized
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the Second, as well as the Ninth, Seventh, and D.C. Circuits, as followers of a “dual”
standard under which a greater burden had been placed on prevailing defendants than
prevailing plaintiffs before fees could be awarded. See 510 U.S. at 521-22 & n. 8, 114 S.Ct. at
1027 & n. 8. The Court expressly disapproved the practice of awarding fees to prevailing
defendants only upon a showing of frivolousness or bad faith, id. at 531-32, 114 S.Ct. at
1032, and it also rejected the argument that the “British Rule” requiring fees as a matter of
course for the winner should be adopted, id. at 533, 114 S.Ct. at 1033. Instead, it opted for a
middle ground, under which “[p]revailing plaintiffs and prevailing defendants are to be treated
alike, but attorney's fees are to be awarded to prevailing parties only as a matter of the court's
discretion.” Id. at 534, 114 S.Ct. at 1033. It agreed that the factors the Lieb court had identified
as relevant could be used to guide the court's discretion, as long as they were applied in an
evenhanded manner. That list included “ ‘frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the need in
particular circumstances to advance considerations of compensation and deterrence.’ ” Id. at
534 n. 19, 114 S.Ct. at 1033 n. 19, quoting Lieb at 788 F.2d at 156. See also Methodist
Hospitals, Inc. v. Sullivan, 91 F.3d 1026, 1030 (7th Cir.1996) (noting that Fogerty required
courts applying the Copyright Act to rely on one standard for awarding attorney's fees to
prevailing parties).
We have, therefore, a situation in which the standard for awarding fees to Playmates for
the trademark part of FASA's case is significantly stricter than the standard for the copyright
portion. If the district court had awarded fees based on the stricter standard, it would have
been relatively [Cite as: 108 F.3d at 144] easy to justify the award based on the more
lenient standard as well. Here, however, the court opted to deny fees to the prevailing party.
Much as we would like to put this litigation to an end, we are unable to discern from the
remarks made in the hearing on the fee petition whether or not the court actually followed the
correct standard for the copyright claims. In almost the same breath, the judge referred to the
Lanham Act standard and BASF, to Fogerty and Sassafras Enterprises, Inc. v. Roshco, Inc.,
889 F.Supp. 343, 348 (N.D.Ill.1995) (correctly holding that Fogerty “made it clear that the
standard for [an attorney's fee] award is the same for plaintiffs and defendants,” and quoting
the Lieb factors), and to unspecified Third and Second Circuit cases. Since the Supreme Court
disapproved of the Second Circuit's approach, and since the Lanham Act standard does not
apply in copyright cases, we cannot tell what the court intended to do here.
In its briefs, FASA has made a Herculean effort to parse the judge's comments,
suggesting that perhaps he meant to refer to the bad faith and exceptional circumstances test to
justify the denial of fees for Lanham Act purposes, and the circumstances as a whole to justify
the denial of the fees for copyright purposes. This interpretation may gain some support from
the FASA III opinion itself, where the court expressed the view that the case hung too closely
in the balance to justify an award of costs for Playmates. (We note that costs under 28 U.S.C.
§ 1920 are normally awarded to the prevailing party as a matter of course, unless exceptional
circumstances are present, see Overbeek v. Heimbecker, 101 F.3d 1225, 1228 (7th Cir.1996),
or unless the case has a mixed outcome, see Testa v. Village of Mundelein, 89 F.3d 443, 447
(7th Cir.1996). Here, Playmates has not contested the decision to deny its costs for § 1920
purposes; any argument it might have had on that point is therefore waived.) The word
“costs” at the conclusion of a judicial opinion is a term of art, which normally does not
encompass attorneys' fees. It is common for courts to enter a direction about costs and then to
entertain a separate fees motion. Although Judge Castillo may have meant both costs and
attorneys' fees, as he indicated at the fee petition hearing, that takes us back where we started,
to the problem of the standard he was using for a fee award.
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Rather than attempting further to read between the lines of the judge's oral remarks, we
prefer to send the fee question back to him to rule again on the petition under the applicable
legal standards. We emphasize in this connection that Fogerty says that “attorney's fees are to
be awarded to prevailing parties only as a matter of the court's discretion.” 510 U.S. at 534,
114 S.Ct. at 1033. As we have frequently noted, this standard is a generous one. See
generally, Monticello School Dist. No. 25 v. George L., 102 F.3d 895, 907 (7th Cir.1996)
(attorney's fees under IDEA); Briggs v. Marshall, 93 F.3d 355, 361 (7th Cir.1996) (attorney's
fees under 42 U.S.C. § 1988). Our own review of this record does not leave us with the
impression that the result of the fee petition could go only one way. The judgment with
respect to the attorneys' fee petition is Vacated and Remanded for further proceedings
consistent with this opinion.
FASA Corp. v. Playmates Toys, Inc., 108 F.3d 140, 142-144 (7thCir. 1997) (Wood, J.).
In April 1998, on remand, the U.S. District Court in Illinois explained why it denied attorney’s
fees to the prevailing defendant:
This Court concludes that FASA's lawsuit was motivated by a desire to stop Playmates
from what it earnestly believed was wrongful copying of works FASA had created. While
there is in hindsight no doubt that FASA may have litigated with too broad of a brush, there
are absolutely no facts in this Court's prior three opinions that support any factual finding of
improper motivation by FASA in bringing its unsuccessful lawsuit. Moreover, this Court
expressly finds that the chilling effect of awarding Playmates attorneys' fees would be too
great and would impose an inequitable burden on FASA under the particular facts and equities
presented by this case. In Sanford v. CBS, Inc., 108 F.R.D. 42, 43 (N.D.Ill.1985), Judge
Aspen denied fees to a prevailing defendant in a similar situation because “it would be
inequitable to force [plaintiff] into financial ruin for bringing in good faith what appeared to be
a legitimate copyright claim.” Playmates' argument that Sanford is inapplicable because it
was decided before Fogerty ignores the fact that equitable considerations of this type are
precisely what the Supreme Court directed district courts to consider in exercising discretion
to grant or deny fees. See Fogerty, 510 U.S. at 533-35.
D. The Purposes Of The Copyright Act Do Not Support An Award Of Fees.
Most importantly, an award of attorneys' fees in this case would not serve to advance the
purposes of the Copyright Act because there are no considerations of compensation or
deterrence that need to be vindicated here. An award of attorneys' fees to Playmates would
serve only to reward its behavior, which was just barely outside the reach of copyright and
trademark laws. Such an award would be contrary to the legislative purposes of the federal
statutes involved in this case.
An award of fees to Playmates will not serve to promote the ultimate aim of our
copyright laws to stimulate artistic creativity for the general public good. See Fogerty, 510
U.S. at 525. If anything, an award of attorneys' fees to Playmates under the circumstances
presented here would discourage creative entities like FASA from ever seeking to vindicate its
rights against a large corporate defendant. In essence, FASA was the party that primarily
vindicated the interests sought to be protected in the Copyright Act by establishing the
protectible original elements of its works and overcoming Playmates' written waiver defense.
Nor does Playmates' reliance on multiple defenses, some of which were ultimately
meritorious, inevitably further creative purposes. Instead, the lesson of this costly litigation is
that it may be better to seek a business rather than a litigation solution, before creating [Cite
as: 1 F.Supp.2d at 867] a toy line that is similar to, but not an illegal copy of, a prior
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product to which the company was previously exposed. Ultimately, this Court determined that
Playmates made a conscious business decision to nearly copy the creative works of FASA.
Playmates escaped liability only because the manner in which it copied FASA's works was
distinct enough to avoid liability and because many of the features of FASA's works were not
protectible under the Copyright Act. These technical defenses, while successful, are slight and
insubstantial relative to the enormous costs of this litigation to both sides.FN4 See Creations
Unlimited, Inc. v. McCain, 112 F.3d 814, 816-17 (5th Cir.1997) (affirmed district court's
decision to decline to award attorneys' fees to copyright defendant who prevailed on summary
judgment on basis of lack of substantial similarity between plaintiff's line drawings and
defendant's tee-shirts).
FN4. The Seventh Circuit's opinion in this case indicated that Playmates had spent over
$2.5 million litigating this case. See FASA, 108 F.3d at 141. It does not take much for
this Court to harbor the safe assumption that FASA has also spent a similar figure
litigating this case. In fact, FASA may have spent more because it bore the burden of
proof in this matter.
CONCLUSION
The proper exercise of this Court's discretion herein requires the Court to once again
reject an award of fees. It is unfortunate that this litigation was prolonged by this attorneys'
fees dispute. The Court recognizes that it bears great responsibility by not clearly enunciating
the specific basis of its prior denial of attorneys' fees. Perhaps the Court mistakenly sought to
avoid writing a fourth opinion in this hotly disputed litigation. Yet, the Court expressly notes
that, rather than seek easy clarification from this Court, Playmates' counsel merely thanked the
Court at the conclusion of the February 13, 1996 proceeding and proceeded to the appellate
court.
FASA Corp. v. Playmates Toys, Inc., 1 F.Supp.2d 859, 866-867 (N.D.Ill. 1998).
This is the final reported opinion in this case. Note that the court found “there are absolutely no
facts in this Court’s prior three opinions that support any factual finding of improper motivation by
[plaintiff] in bringing its unsuccessful lawsuit.”
Harris Custom Builders (1998)
In April 1998, the Seventh Circuit wrote:
However, although the Supreme Court [in Fogerty] declined to follow our approach, it also
declined to adopt the British rule, which would have meant that the prevailing party would
receive fees as a matter of course. Rather, whether to grant fees is left to the judge's
discretion:
Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney's fees
are to be awarded to prevailing parties only as a matter of the court's discretion.
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 1033, 127 L.Ed.2d 455 (1994).
The Supreme Court did not precisely articulate what should guide a district judge's exercise of
that discretion. It did, however, cite Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156
(3rdCir. 1986), with approval in a footnote, for a nonexclusive list of factors which could be
considered. They include “frivolousness, motivation, objective unreasonableness (both in the
factual and in the legal components of the case) and the need in particular circumstances to
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advance considerations of compensation and deterrence.” 510 U.S. at 534 n. 19, 114 S.Ct. at
1033 n. 19.
In the present case, what the district court relied on was that the award was for work done
on the copyright claims only, not on any of Hoffmeyer's counterclaims, and that the court
itself had prolonged the litigation by making an incorrect decision on Harris' summary
judgment motion.
Harris Custom Builders, Inc. v. Hoffmeyer, 140 F.3d 728, 730 (7thCir. 1998).
Cited in Susan Wakeen Doll Co., Inc. v. Ashton Drake Galleries, 272 F.3d 441, 457 (7thCir.
2001); McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 571 (7thCir. 2003).
In June 1999 the Seventh Circuit affirmed the award of $228,918 in attorney’s fees to prevailing
defendant:
Other considerations cited by the district judge include that the motivation for this lawsuit
was to “defeat a business competitor.” In fact, it appears that Hoffmeyer was financially
destroyed by the lawsuit and is now bankrupt. [¶] In short, we are satisfied that the district
judge properly exercised his discretion in awarding fees. The decision to do so is
AFFIRMED.
Harris Custom Builders, Inc. v. Hoffmeyer, not reported in F.3d, 1999 WL 417865 at *2 (7thCir.
1999).
Gonzales (2002)
In August 2002, the Seventh Circuit heard an appeal from a case in which plaintiff received a
mere $3000 statutory damages (the minimum amount on each of four counts) and the plaintiff
received no attorney’s fees. The trial judge tersely explained the denial of attorney’s fees:
“[Defendant]’s actions, though willful, are not the kind of flagrant behavior that would justify an
award of attorneys' fees.”28 The defendant had willfully infringed plaintiff’s copyrights, but the
trial judge did not award attorney’s fees because the defendant had stopped infringing when he was
sued by plaintiff. Judge Posner wrote a lengthy discussion that suggested that the trial judge
should have awarded attorney’s fees, or at least the trial judge should have better explained his
reasons for denying attorney’s fees:
Section 505 of the Copyright Act does not set forth a standard for awarding attorneys'
fees to a prevailing party; it merely authorizes such awards. In Fogerty v. Fantasy, Inc., 510
U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994), the Supreme Court was asked to align
interpretation of section 505 with that of the civil rights attorneys' fees awards act, 42 U.S.C.
§ 1988, under which a prevailing plaintiff is entitled to fees virtually as a matter of course but
a prevailing defendant only if the suit is frivolous. E.g., Christiansburg Garment Co. v.
EEOC, 434 U.S. 412, 422, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978); Khan v. Gallitano, 180
F.3d 829, 837 (7th Cir.1999); National Home Equity Mortgage Ass'n v. Face, 283 F.3d 220,
224 (4th Cir.2002). The Court in Fogerty refused, reasoning that copyright defenses are as
important as copyright claims (a successful defense enlarges the public domain, an important
resource for creators of expressive works) and therefore there should be no thumb on the
scales. It did not define the unitary standard to be applied to prevailing parties in copyright
28
Gonzales, 301 F.3d at 609 (quoting trial judge).
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suits but in a footnote, quoting a lower-court opinion, listed the following nonexclusive factors
to guide determination: “frivolousness, motivation, objective unreasonableness (both in the
factual and in the legal components of the case) and the need in particular circumstances to
advance consideration of compensation and deterrence.” Fogerty v. Fantasy, Inc., supra, 510
U.S. at 535 n. 19.
Since the factors aren't exclusive, and seem rather miscellaneous and ill-assorted,
they leave the decision on whether to grant or deny attorneys' fees to the prevailing
party in a copyright case pretty much to the discretion of the district judge, subject to
necessarily highly deferential appellate review29 — for the vaguer a standard to be applied
by a trial judge, the greater his roaming room. But we do have to insist that the judge explain
the grounds for his decision in sufficient depth to enable their reasonableness to be
determined; otherwise there would be no appellate control at all over such decisions. And so
we have not hesitated in the past to remand section 505 determinations when the district judge
had not supplied us with sufficient indication of his reasoning process to enable us to decide
whether the determination was reasonable. Susan Wakeen Doll Co., v. Ashton-Drake
Galleries, 272 F.3d 441, 457-58 (7th Cir.2001); Harris Custom Builders, Inc. v. Hoffmeyer,
140 F.3d 728, 730-31 (7th Cir.1998); FASA Corp. v. Playmates Toys, Inc., 108 F.3d 140,
144 (7th Cir.1997); Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 731-32 (7th
Cir.1996); Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9th Cir.1996); Historical
Research v. Cabral, 80 F.3d 377, 379 (9th Cir.1996) (per curiam).
This is such a case. The fact that Transfer did not persist in its infringing activities after
being sued is no doubt a point in its favor, but without amplification is not a strong one. The
fact that a criminal does not persist in committing crimes after he's indicted doesn't argue
strongly in his favor. The infringement was willful; and willful infringements involving small
[Cite as: 301 F.3d at 610] amounts of money cannot be adequately deterred (and remember
“the need in particular circumstances to advance consideration of ... deterrence”) without an
award of attorneys' fees. No one can prosecute a copyright suit for $3,000. The effect of the
district court's decision if universalized would be to allow minor infringements, though
willful, to be committed with impunity, to be in effect privileged, immune from legal redress.
The smaller the damages, provided there is a real, and especially a willful, infringement,
the stronger the case for an award of attorneys' fees.30 We urge this point, and we are not
the first to do so — see, e.g., Magnuson v. Video Yesteryear, supra, 85 F.3d at 1432; Quinto
v. Legal Times of Washington, Inc., 511 F.Supp. 579, 581 (D.D.C.1981); Paul Goldstein,
COPYRIGHT § 12.3.2.2 (2d ed.2002); Melville B. Nimmer and David Nimmer, NIMMER ON
COPYRIGHT § 14.10 (2002) — not as a rule to be mechanically applied but rather as a
consideration for district judges to weigh seriously; we go so far as to suggest, by way of
refinement of the Fogerty standard, that the prevailing party in a copyright case in which
the monetary stakes are small should have a presumptive entitlement to an award of
attorneys' fees.31 The judge in this case may have had a good reason to find the presumption
rebutted but this we cannot tell from his extremely brief discussion. The case must therefore
be remanded for further consideration consistent with this opinion.
Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 609-610 (7thCir. 2002) (Posner, J.).
Boldface added by Standler. The Seventh Circuit has generally ignored the Lieb factors, see
page 56, below.
29
30
Boldface added by Standler.
31
Boldface added by Standler.
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There are no further opinions in this case in Westlaw, so we do not know the final outcome.
Judge Posner does not cite Lieb. Instead, he mentions the U.S. Supreme Court in Fogerty “...
in a footnote, quoting a lower-court opinion, listed the following factors ....” Gonzales,
301 F.3d at 609. About 19 months after Gonzales, Judge Posner wrote his own factors in
Assessment Technologies.
In my May 2010 search for law review articles on fee-shifting in copyright cases, the most recent
article was published in January 2004. In that article, two young attorneys criticize the holding in
Gonzales:
... both the Fifth Circuit and the Seventh Circuit have undermined Fogerty by establishing
broad presumptions that fail to reflect the unique characteristics of each individual case in
relation to the purposes of the Copyright Act. [footnote to two Fifth Circuit cases and
Gonzales in the Seventh Circuit.]
Robert Aloysius Hyde and Lisa M. Sharrock, “A Decade Down the Road But Still Running
Through the Jungle: A Critical Review of Post-Fogerty Fee Awards,” 52 UNIV. KANSAS LAW
REVIEW 467, 468 (Jan 2004). See also, Ibid. at 475.
It appears that the Gonzales presumption is premised on the counterintuitive proposition that
the least successful prevailing plaintiffs should have the greatest entitlement to attorney’s fees.
.... [¶] A related flaw in the Gonzales opinion is the court’s erroneous assumption parties can
predict the amount of damages that will ultimately be awarded before deciding whether to
engage in protracted litigation.
Ibid. at 477.
But note that willful infringement by defendant would justify awarding attorney’s fees to
prevailing plaintiff, as explained below at page 71. Therefore, the result in Gonzales could easily
be justified under old law, without any need for new rules (e.g., “presumptive entitlement”).
Assessment Technologies (2004)
In 2003, the Seventh Circuit considered a case “about the attempt of a copyright owner to use
copyright law to block access to data that not only are neither copyrightable nor copyrighted, but
were not created or obtained by the copyright owner.” Assessment Technologies, 350 F.3d 640,
641 (7thCir. 2003). The Seventh Circuit dismissed the copyright claim. In March 2004, a panel
of the Seventh Circuit — including Judges Richard Posner and Diane Wood — ordered an award
of attorney’s fees to prevailing defendant in that case. Judge Posner wrote a long discussion:
Before us now is the defendant's motion for an award of attorneys' fees incurred by it in
defending the suit both in the district court and in our court. The [Cite as: 361 F.3d at 436]
Copyright Act authorizes the award of reasonable attorney's fees to the prevailing party in a
suit under the Act. 17 U.S.C. § 505. And unlike civil rights suits, where while a prevailing
plaintiff is presumptively entitled to an award of fees a prevailing defendant is entitled to such
an award only if the suit was groundless, e.g., Christiansburg Garment Co. v. EEOC, 434
U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978); Johnson v. Daley, 339 F.3d 582, 587 (7th
Cir.2003) (en banc), in copyright suits “prevailing plaintiffs and prevailing defendants are to
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be treated alike.” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d
455 (1994). The reason is that the plaintiff in such a suit is not a little guy suing a big guy —
an employee suing an employer, for example — but often the reverse. For such a suit pits a
property owner against an individual or firm that will often be, and in this case is, someone
who seeks not to enforce a property right — a right to exclude that may generate big profits —
but to obtain nonexclusive access to the intellectual public domain. The public interest in that
access is as great as the public interest in the enforcement of copyright; this is shown by the
restrictions with which copyright is hedged about, of which the most pertinent is that, as we
pointed out in our original opinion, once work enters the public domain it cannot be
appropriated as private (intellectual) property. 350 F.3d at 643; Feist Publications, Inc. v.
Rural Telephone Service Co., 499 U.S. 340, 348, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991);
Country Kids 'N City Slicks, Inc. v. Sheen, 77 F.3d 1280, 1287 (10th Cir.1996); Norma
Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 47 (5th Cir.1995); Engineering Dynamics,
Inc. v. Structural Software, Inc., 26 F.3d 1335, 1344 (5th Cir.1994); Computer Associates
International, Inc. v. Altai, Inc., 982 F.2d 693, 710 (2d Cir.1992); 3 Melville B. Nimmer &
David Nimmer, NIMMER ON COPYRIGHT § 13.03[F][4], p. 13-141 (2004); see also Aronson
v. Quick Point Pencil Co., 440 U.S. 257, 262, 99 S.Ct. 1096, 59 L.Ed.2d 296 (1979);
Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 609 (7thCir. 2002).
The courts have not said, however, that the symmetry of plaintiff and defendant in
copyright cases requires a presumption that the prevailing party, whichever it is, is entitled to
an award of attorneys' fees. They have instead left it to judicial discretion by setting forth a
laundry list of factors, all relevant but none determinative. Fogerty v. Fantasy, Inc., supra, 510
U.S. at 534 n. 19, 114 S.Ct. 1023; McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d
557, 571 (7th Cir.2003); Gonzales v. Transfer Technologies, Inc., supra, 301 F.3d at 609;
Berkla v. Corel Corp., 302 F.3d 909, 923 (9th Cir.2002); Lotus Development Corp. v.
Borland Int'l, Inc., 140 F.3d 70, 73-74 (1st Cir.1998). The list, moreover, is nonexclusive,
Hogan Systems, Inc. v. Cybresource International, Inc., 158 F.3d 319, 325 (5th Cir.1998),
arguably dictum, Matthew Bender & Co. v. West Publishing Co., 240 F.3d 116, 121 (2dCir.
2001), and in need of simplification — a process begun in this circuit in Gonzales v. Transfer
Technologies, Inc., supra, and continued here.
The two most important considerations in determining whether to award attorneys' fees
in a copyright case are the strength of the prevailing party's case and the amount of damages
or other relief the party obtained. If the case was a toss-up and the prevailing party obtained
generous damages, or injunctive relief of substantial monetary value, there is no urgent need
to add an award of attorneys' fees. Cf. Mathias v. Accor Economy Lodging, Inc., 347 F.3d
672, 677 (7th Cir.2003). But if at the other extreme the claim or defense was frivolous and the
prevailing party obtained no relief at all, the case for awarding him [Cite as: 361 F.3d at
437] attorneys' fees is compelling. As we said with reference to the situation in which the
prevailing plaintiff obtains only a small award of damages, “the smaller the damages,
provided there is a real, and especially a willful, infringement, the stronger the case for an
award of attorneys' fees .... [W]e go so far as to suggest, by way of refinement of the Fogerty
standard, that the prevailing party in a copyright case in which the monetary stakes are small
should have a presumptive entitlement to an award of attorneys' fees.” Gonzales v. Transfer
Technologies, Inc., supra, 301 F.3d at 610; see also Magnuson v. Video Yesteryear, 85 F.3d
1424, 1432 (9th Cir.1996). When the prevailing party is the defendant, who by definition
receives not a small award but no award, the presumption in favor of awarding fees is
very strong.32 See Diamond Star Building Corp. v. Freed, 30 F.3d 503, 506 (4thCir. 1994).
32
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For without the prospect of such an award, the party might be forced into a nuisance
settlement or deterred altogether from exercising his rights.
We of course were not saying that the smaller the damages, the larger the fee. The fee is
independent of the size of the damages. The point is only that when a meritorious claim or
defense is not lucrative, an award of attorneys' fees may be necessary to enable the party
possessing the meritorious claim or defense to press it to a successful conclusion rather than
surrender it because the cost of vindication exceeds the private benefit to the party. The best
illustration is in fact a case like this, where the party awarded the fees, being the defendant,
could not obtain an award of damages from which to pay his lawyer no matter how costly it
was for him to defend against the suit.
Although the plaintiff managed to obtain a judgment from the district court, and so we do
not go so far as to call the suit frivolous, the suit was marginal, as we explained in our
opinion. The plaintiff was rather transparently seeking to annex a portion of the intellectual
public domain. And since the prevailing party was the defendant, it obtained no affirmative
relief from its victory. Unless a party in that situation has a prospect of obtaining attorneys'
fees, it will be under pressure to throw in the towel if the cost is less than the anticipated
attorneys' fees. We suggested in our opinion that “for a copyright owner to use an
infringement suit to obtain property protection, here in data, that copyright law clearly does not
confer, hoping to force a settlement or even achieve an outright victory over an opponent that
may lack the resources or the legal sophistication to resist effectively,” could be a form of
copyright misuse. 350 F.3d at 647. We did not reach the question whether the plaintiff's
conduct rose to the level of actual copyright misuse, but we made clear that it came
close, and an award of attorneys' fees to the defendant is an appropriate sanction.33
For illustrative cases, see Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 73233 (7th Cir.1996); Bond v. Blum, 317 F.3d 385, 397-98 (4th Cir.2003) (a case in which
misuse was found); Coles v. Wonder, 283 F.3d 798, 804 (6th Cir.2002); Edwards v. Red
Farm Studio Co., 109 F.3d 80, 83 (1st Cir.1997).
Most of the fees incurred by the defendant were incurred in the district court proceedings,
and ordinarily that would argue compellingly for our limiting our award to the appellate fees
and inviting the defendant to file in the district court a motion for the award of the fees that he
incurred in that court. But in some cases in which detailed billing records of the applicant are
submitted to the court of appeals, as the defendant has done in this case, and the opposing
party has [Cite as: 361 F.3d at 438] had a chance to rebut, as it has, we can make the full
award and save the parties the added expense and the district judge the added bother of a
separate fees proceeding in the district court. Cengr v. Fusibond Piping Systems, Inc., 135
F.3d 445, 454 (7th Cir.1998); Nanetti v. University of Illinois, 944 F.2d 1416, 1422 (7th
Cir.1991); Ustrak v. Fairman, 851 F.2d 983, 989 (7th Cir.1988); In re Thirteen Appeals, 56
F.3d 295, 312 (1st Cir.1995); cf. Walz v. Town of Smithtown, 46 F.3d 162, 170 (2d
Cir.1995). Such an approach furthers the principle that the fees tail should not be allowed to
wag the merits dog too vigorously. Ustrak v. Fairman, supra, 851 F.2d at 987-88; see also
Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983).
In all the cases cited, except Hensley and Walz, the court of appeals was fixing fees for
services incurred in the district court as well, as we are asked to do here; and that might seem
contrary to the principle that the award of fees is committed to the discretion of the court in
which the services for which fees are being sought were rendered; for that is the court that
observed the rendition of the services. Ordinarily, of course, discretion is to be exercised by
the judicial officer to whom that discretion has been confided. Icicle Seafoods, Inc. v.
33
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Worthington, 475 U.S. 709, 106 S.Ct. 1527, 89 L.Ed.2d 739 (1986). But the scope of a
judicial officer's discretion varies with the circumstances. Sometimes it is broad, sometimes a
mere point. In this case, because there is no room for disagreement over the reasonableness of
the various fees sought by the defendant for the work in the district court, there is no
discretion for the district court to exercise and so no purpose would be served by a remand.
The defendant's lawyer billed the defendant for 778.2 hours of work, up to and including
the trial in the district court, at an average rate of $115 per hour, for a total of $88,374.35. The
plaintiff does not question the total number of hours billed or the billing rate. But some of this
work, the plaintiff contends and the defendant concedes, was allocable to the state court
proceedings discussed in our opinion on the merits, and the defendant suggests that we reduce
the total amount by a third, to $58,916.23, to reflect this fact. Our examination of the billing
records persuades us that this is indeed the correct discount.
The defendant's lawyer billed the defendant another $7,849.05 for 68.7 hours of work
spent challenging the plaintiff's request in the district court for an award of attorneys' fees, plus
a flat fee of $7,500 for work on the wording of the injunction and another flat fee of $17,500
for representing the defendant on appeal. The defendant wants us to ignore the flat fees and
award a larger fee based on the number of hours that the lawyer actually worked on the two
matters.
The courts of appeals have split three ways on the question of the weight to be given to
the terms of the contract between the party and his lawyer in determining an award of
attorneys' fees in a copyright case. Compare Pinkham v. Camex, Inc., 84 F.3d 292, 294 (8th
Cir.1996) (no weight), with Crescent Publishing Group, Inc. v. Playboy Enterprises, 246
F.3d 142, 144 (2d Cir.2001) (some weight), with Lieb v. Topstone Industries, 788 F.2d 151,
156 (3d Cir.1986) (controlling weight in the sense that the contract places a ceiling on what the
court can award the lawyer). This court has not opined on the issue, but we think the Third
Circuit has it right. The best evidence of the value of the lawyer's services is what the client
agreed to pay him. See [Cite as: 361 F.3d at 439] Medcom Holding Co. v. Baxter Travenol
Laboratories, Inc., 200 F.3d 518, 520 (7th Cir.1999).
This conclusion may seem in tension with the decision of the Supreme Court in
Blanchard v. Bergeron, 489 U.S. 87, 92-96, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989), to decline
to give controlling weight to the fees specified in contingent-fee contracts in civil rights cases.
But the reason was related to the structure of contingent-fee contracts, and we are not dealing
with such a contract in this case. Even a generous such contract will not yield a significant fee
if the damages that the plaintiff obtains are slight: 40 percent of $1,000 is not enough to induce
a competent lawyer to handle even a slam-dunk case. The lawyer might nevertheless take on a
contingency basis a case unlikely to yield more, if there were some probability of a larger
award. And so one observes contingent-fee contracts in cases in which the likeliest recovery is
small. In many of those cases, were it not for the expectation of an additional, court-ordered
award if the suit was successful but yielded little in the way of damages, the plaintiff might
not have been able to interest a lawyer in taking the case in the first place. So the percentage
specified in the contract should not cap such awards. Conceivably, the fixed fees that the
defendant's lawyer charged his client here were influenced by the prospect of a larger fee if the
defendant won the case and persuaded the court to award fees, for his contract with the
defendant required that any additional award be turned over to him. In the circumstances,
however, the negotiated fees should be the ceiling. For work on the wording of the injunction,
the defendant is seeking $9,973, which is almost $2,500 above the agreed-on $7,500 fee for
this service, and strikes us as excessive. For the appeal, the defendant is seeking $42,056, a
sum not unreasonable in itself, but supported by time sheets for only $5,031, which is less
than a third of the flat fee of $17,500 that the lawyer charged.
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That the defendant did not prevail on every single one of its contentions is no reason to
cut down the award of fees, however. E.g., Hensley v. Eckerhart, supra, 461 U.S. at 440, 103
S.Ct. 1933. As we pointed out recently, “a plaintiff is not to be denied full attorneys' fees
merely because he lost some interim rulings en route to ultimate success. Such setbacks are
well-nigh inevitable, and a lawyer who nevertheless was sedulous to avoid them might lose a
good case through an excess of caution.” Alliance to End Repression v. City of Chicago, 356
F.3d 767, 770 (7th Cir.2004) (citations omitted).
To summarize, the plaintiff is ordered to pay the defendant a total of $91,765.28
($58,916.23 + $7,849.05 + $7,500 + $17,500) in attorneys' fees.
Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 435-439 (7thCir. 2004)
(Posner, J.).
I make two criticisms of Assessment Technologies:
1. Neither the statute, 17 U.S.C. § 505, nor the U.S. Supreme Court, Fogerty v. Fantasy, Inc.,
510 U.S. 517 (1994), mentions presumptions in awarding attorney’s fees. Assessment
Technologies is a departure from law in that it creates a very strong presumption for awarding
attorney’s fees to a prevailing defendant in a copyright case.
2. Assessment Technologies effectively creates a rule for mandatory fee awards. This is contrary
to both the statute (“the court in its discretion may [emphasis added] allow”) and Fogerty, 510
U.S. at 534 (“... we find it impossible to believe that Congress, without more, intended to
adopt the British Rule. .... ... attorney’s fees are to be awarded to prevailing parties only
[emphasis added] as a matter of the court’s [equitable] discretion.”).
The rules in Assessment Technologies needs to be read together with the facts of this one case,
which involved attempted copyright misuse by plaintiff. When interpreted with the facts of this
one case, Assessment Technologies is consistent with application of the Lieb factors (e.g.,
motivation) mentioned in Fogerty. But Assessment Technologies should not be read as a general
rule, applicable to all copyright cases, because such a general rule would violate both the statute
and binding precedent in Fogerty. However, as discussed beginning at page 60, below, the
Seventh Circuit has apparently interpreted Assessment Technology to replace the factors in Lieb.
In January 2009, a federal trial court in Washington state rejected Assessment Technologies:
[Defendant] asserts that there is a strong presumption in favor of awarding fees to
prevailing defendants. Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d
434, 437 (7th Cir.2004). However, there are several reasons to believe that such a
presumption does not apply, in the Ninth Circuit in general, or in this case in particular. First,
WIREdata is a Seventh Circuit case; [Defendant] has not cited Ninth Circuit authority that
indicates an applicable presumption. Second, in WIREdata, an award of attorney's fees was
appropriate because the Plaintiff's conduct came close to copyright misuse; in that case, the
Plaintiff was attempting to extend copyright protection to public domain data. Id. at 437.
No such accusation of an impermissible application of copyright has been claimed against the
Plaintiff in the present case. Third, in Fogerty, the Supreme Court rejected an argument that
courts in copyright cases should employ the “British Rule” and automatically award attorney's
fees to prevailing parties. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127
L.Ed.2d 455 (1994).FN2
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FN2. Even if a presumption of attorney's fees exists, the Court would not award
attorney's fees in this case.
Modular Arts, Inc. v. Defendant Corp., Not Reported in F.Supp2d, 2009 WL 151336 at *1
(W.D.Wash. 2009).
Woodhaven Homes (2005)
In January 2005, in a case where defendant won summary judgment, the Seventh Circuit wrote:
The primary issue on appeal is Robbins’34 efforts to recover its attorney fees from
Woodhaven under § 505. The Copyright Act allows the award of reasonable attorney fees to
a prevailing party. 17 U.S.C. § 505. The district court denied Robbins' request in light of the
factors outlined by the Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114
S.Ct. 1023, 127 L.Ed.2d 455 (1994). These nonexclusive factors include “frivolousness,
motivation, objective unreasonableness (both in the factual and in the legal components of the
case) and the need in particular circumstances to advance consideration of compensation and
deterrence.” Id. at 534 n. 19, 114 S.Ct. 1023. The court concluded that Robbins should not be
awarded fees because much of the work performed by its lawyers related to various defenses
that were ultimately never addressed or resolved.
But in the time period since the district court's decision, we issued an opinion clarifying
the Fogerty standard. In Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d
434, 436 (7th Cir.2004), we held that prevailing defendants in copyright cases, like
Robbins, are presumptively entitled (and strongly so) to recover attorney fees:35
[T]he prevailing party in a copyright case in which the monetary stakes are small should
have a presumptive entitlement to an award of attorneys' fees. When the prevailing party
is the defendant, who by definition receives not a small award but no award, the
presumption in favor of awarding fees is very strong. For without the prospect of such an
award, the party might be forced into a nuisance settlement or deterred all together from
exercising his rights.
Id. at 437 (internal quotation and citations omitted). Robbins did prevail, but its victory was
costly — it incurred over $220,000 in legal fees. In this case, like Assessment Technologies,
awarding attorney fees is appropriate because Robbins “could not obtain an award of damages
from which to pay his lawyer no matter how costly it was for [it] to defend against the suit.”
361 F.3d at 437.
The district court evaluated the fees issue without the benefit of Assessment Technologies.
Accordingly, we remand the case with instructions to evaluate Robbins' request in light of
Assessment Technologies. While we do not pass judgment on what the award should be,
§ 505 demands that it be “reasonable.” And the amount Robbins seeks, over $220,000,
seems quite excessive. This was not a high stakes case, as Woodhaven claimed only $55,000
in damages. Indeed, Robbins' [Cite as: 396 F.3d at 825] fees nearly surpassed the value of
the Hotzes' home.
Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824-825 (7thCir. 2005).
34 Hotz owned the home, Robbins was the contractor who built the home. Hotz had paid
Woodhaven $1500 for a set of “customized blueprints”, which Robbins used. Robbins is a defendant
in this case.
35
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On remand, the court criticized the attorney for Robbins for not providing detailed records of
attorney’s fees that were organized “according to the type of work done.” The trial court wanted to
know how much was spent on each motion, not how much was spent each month. Woodhaven
Homes & Realty, Inc. v. Hotz, Not Reported in F.Supp.2d, 2005 WL 1924214 at *3 (E.D.Wis.
2005). After the attorney for Robbins submitted revised records, the trial court awarded $75,000
in attorney’s fees, which was approximately 20% of the amount requested by Robbins. The trial
court’s legal analysis says:
17 U.S.C. § 505 provides that in a copyright infringement action, “the court may ...
award a reasonable attorney's fee to the prevailing party as part of the costs.” Prevailing
plaintiffs and prevailing defendants (like Robbins in the instant case) are treated alike, but
attorney's fees are awarded to prevailing parties only as a matter of the court's discretion. See
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). However, when the “prevailing party is
the defendant, who by definition receives not a small award but no award, the presumption in
favor of awarding fees is very strong. For without the prospect of such an award, the party
might be forced into a nuisance settlement or deterred altogether from exercising his rights.”
Assessment Technologies, 361 F.3d at 437 (internal citations omitted).
[Cite as: 2007 WL 30882 at *5] In light of this exceedingly strong presumption, the
Court has no trouble concluding that an award of attorney's fees is appropriate in the instant
case, and the Seventh Circuit has already held that Robbins is entitled to such an award. See
Woodhaven Homes, 396 F.3d at 824 (“[i]n this case, like Assessment Technologies,
awarding attorney fees is appropriate”). The Court still must determine what amount is
reasonable, based on the hours worked by Robbins' attorneys and legal support staff.
The “lodestar” figure, obtained by multiplying the number of hours reasonably expended
on the litigation by a reasonable hourly rate, is presumed to be the reasonable fee. See Hensley
v. Eckerhart, 461 U.S. 424 (1983). The Court has already concluded that the hourly rates
charged by Robbins' attorneys and paralegals is reasonable. Docket No. 215, August 9, 2005
Decision and Order at 6. As to the amount of hours, they must be “reasonably expended.”
“Cases may be overstaffed, and the skill and expertise of lawyers vary widely. Counsel for
the [requesting party] should make a good faith effort to exclude from a fee request hours that
are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice
ethically is obligated to exclude such hours from his fee submission.” Hensley, 461 U.S. at
434.
The most important factor used to determine the reasonableness of a fee request is the
result obtained. Where a party has obtained “excellent results, his attorney should recover a
fully compensatory fee. Normally this will encompass all hours reasonably expended on the
litigation, and indeed in some cases of exceptional success an enhanced award may be
justified. In these circumstances the fee award should not be reduced simply because the
[requesting party] failed to prevail on every contention raised in the lawsuit.” Hensley, 461
U.S. at 435. Litigants “in good faith may raise alternative legal grounds for a desired outcome,
and the court's rejection of or failure to reach certain grounds is not a sufficient reason for
reducing a fee.” Id. A “plaintiff is not to be denied full attorneys' fees merely because he lost
some interim rulings en route to ultimate success. Such setbacks are well-nigh inevitable, and
a lawyer who nevertheless was sedulous to avoid them might lose a good case through an
excess of caution.” Alliance to End Repression v. City of Chicago, 356 F.3d 767, 770 (7th
Cir.2004).
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However, in some cases (and this is such a case), a party may present “distinctly
different claims for relief that are based on different facts and legal theories.” Hensley, 461
U.S. at 434. In such cases, “counsel's work on one claim will be unrelated to his work on
another claim. Accordingly, work on an unsuccessful claim cannot be deemed to have been
‘expended in pursuit of the ultimate result achieved.’ “ Id. at 435 (internal citation omitted).
Therefore, the Court must analyze the reasonableness of Robbins' fees while considering
the “relationship between the amount of the fee awarded and the results obtained” in the
litigation. Hensley, 461 U.S. at 437. The results obtained by Robbins were positive-dismissal
from the lawsuit, the avoidance of monetary liability, and an ultimate ruling by the Seventh
Circuit that it was entitled to an award of attorneys' fees. However, this was not a “high stakes
case, as Woodhaven claimed only $55,000 in damages. Indeed, Robbins' fees nearly
surpassed the value of the Hotzes' home.” Woodhaven Homes, 396 F.3d at 824-25. It
appears that Robbins spent $360,000 to avoid a $55,000 adverse judgment and to recover its
fees.
[Cite as: 2007 WL 30882 at *6] The Court is mindful that the fee award need not be
tied to the actual amount of damages at issue. See International Korwin Corp. v. Kowalczyk,
855 F.2d 375 (7th Cir.1988) (allowing $21,500 in attorney's fees to a plaintiff who was
awarded $4,500 in statutory damages in infringement). Defendants accused of commercial
copyright infringement have a variety of reasons to litigate unrelated to the damages sought in
a specific case. These include maintaining the defendant's commercial reputation, maintaining
the ability to continue the use of a particular design and/or terminating the alleged monopoly
of the plaintiff in the design. See Trico Products Corp. v. Anderson Co., 147 F.2d 721, 722
(7th Cir.1945). Therefore, it was not presumptively unreasonable for Robbins to continue
litigating as its legal fees escalated. At the same time, this principle mitigates against the
measure of success obtained by Robbins in this litigation, as Robbins did not prevail on its
claim for invalid copyright. And as the Court noted in the context of Robbins' continuing
efforts to litigate its claim for invalid copyright, Robbins did not allege any future intent to use
the copyright, so it is unclear how important such a result would have been for Robbins. The
Court has reviewed the bills submitted by Robbins in light of all of the foregoing
considerations and legal principles.
Woodhaven Homes & Realty, Inc. v. Hotz, Not Reported in F.Supp.2d, 2007 WL 30882 at *4-*6
(E.D.Wis. 2007). The trial court also said:
The Supreme Court cautions that “[a] request for attorney's fees should not result in a second
major litigation,” yet that is exactly what this has become. Hensley, 461 U.S. at 437. While
the Court is inclined to allow some fees relating to Robbins' pursuit of fees, $136,000.00 is an
absurd amount.
Woodhaven, 2007 WL 30882 at *7.
Finally, the Court is quite familiar with the course of this litigation and Robbins'
litigiousness therein. The Court has no choice but to conclude, in some degree, that the
amount of fees incurred by Robbins is a direct result of overzealous litigation.
Woodhaven, 2007 WL 30882 at *8.
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Bryant v. Gordon (N.D. Ill 2007)
In August 2007, a U.S. District Court denied attorney’s fees to prevailing plaintiff because
there was nothing frivolous, and no bad faith, about either the claims or defenses. The court
quoted two U.S. Supreme Court cases, including the Lieb factors, but ignored all of the Seventh
Circuit jurisprudence on attorney’s fees in copyright cases. Bryant v. Gordon, 503 F.Supp.2d
1062, 1066-67 (N.D.Ill. 2007). One wonders whether (1) the attorneys did quick legal research
and stopped with the U.S. Supreme Court cases, or (2) at least one of the attorneys preferred to
avoid the presumption in Assessment Technologies and subsequent cases. The U.S. Supreme
Court decision in Fogerty is, of course, binding precedent in the Seventh Circuit.
JCW Investments v. Novelty (2007)
In November 2007, in a case involving prevailing plaintiffs who sought attorney’s fees for an
appeal reported at 482 F.3d 910 (7thCir. 2007), Judge Wood of the Seventh Circuit wrote:
Novelty's next argument is that an award of fees is unwarranted because its appeal was
not frivolous. But a finding of frivolity or bad faith is not required under the Copyright Act,
which permits an award of attorneys' fees and costs in the court's discretion. 17 U.S.C. § 505.
That discretion is guided by many factors, including “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the need in
particular circumstances to advance considerations of compensation and deterrence.” Fogerty
v. Fantasy, Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) (internal
quotation omitted). We have said that the two most important considerations are “the strength
of the prevailing party's case and the amount of damages or other relief the party obtained.”
Assessment Technologies, 361 F.3d at 436; see also Gonzales v. Transfer Technologies, Inc.,
301 F.3d 608, 610 (7th Cir.2002). The amount of damages Tekky36 has recovered in this
litigation is not small: the jury awarded a total of $291,000 on Tekky's various claims, and the
district court awarded $575,099.82 in attorneys' fees, which covered most of the expense of
the district court litigation. When “a plaintiff wins a suit and is entitled by statute to a
reasonable attorneys' fee, the entitlement extends to the fee he reasonably incurs in defending
the award of that fee. Otherwise the fee will undercompensate.” Gorenstein Enters., 874 F.2d
at 438 (internal citation omitted). The strength of Tekky's case against Novelty weighs heavily
in favor of awarding fees, as the copyright infringement in this case was flagrant, see JCW
Invs., 482 F.3d at 916-17, and the trademark infringement was willful, see BASF Corp. v.
Old World Trading Co., Inc., 41 F.3d 1081, 1099 (7th Cir.1994) (interpreting Lanham Act's
allowance of fees in “exceptional” cases to encompass those in which the act of infringement
was “malicious, fraudulent, deliberate or willful”). Accordingly, we are persuaded that Tekky
is entitled to an award of the fees that it reasonably incurred in defending against Novelty's
appeal.
This brings us to the third and final question: whether the amount Tekky seeks is
reasonable. Novelty predictably asserts that it is not, but it does not explain whether it objects
to the hourly rate, the number of hours expended on particular tasks, or both. Having
reviewed the records ourselves, we conclude that one category of the requested fees is indeed
36
Tekky Toys is the plaintiff in this case.
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excessive, and so we will reduce it even without an explicit request from Novelty to do so.
Specifically, lead counsel claims that it took him 33.25 hours to prepare this petition, at a rate
of $450 per hour, for a total of $14,962.50. The petition, however, [Cite as: 509 F.3d at
343] consisted only of a six-page argument, a three-page affidavit, and several computergenerated billing records. Because an experienced litigator should not have required more
than half that amount of time to prepare such a document, we reduce the fee award of $77,905
by $7,481.25.
JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342-343 (7thCir. 2007) (Wood, J.).
There are no further opinions in this case in Westlaw, so we do not know the final outcome.
Note that willful infringement by defendant would justify awarding attorney’s fees to
prevailing plaintiff, as explained below at page 71. Therefore, the result in JCW could easily be
justified under old law.37
Riviera (2008)
In February 2008, the Seventh Circuit considered attorney’s fees in a copyright case where the
plaintiff had filed a motion to dismiss, “conceded that it lacked the evidence to prove its claim”.
Judge Easterbrook of the Seventh Circuit wrote:
Midwest then applied for attorneys' fees under § 101 of the Copyright Act of 1976,
codified at 17 U.S.C. § 505. That section authorizes a district court to “award a [Cite as: 517
F.3d at 928] reasonable attorney's fee to the prevailing party as part of the costs.” Unlike
many fee-shifting statutes, which entitle prevailing plaintiffs to recover fees as a matter of
course but allow prevailing defendants to recover fees only if the suit was frivolous, § 505
treats both sides equally and allows an award in either direction. Fogerty v. Fantasy, Inc., 510
U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). Since Fogerty we have held that the
prevailing party in copyright litigation is presumptively entitled to reimbursement of its
attorneys' fees.38 See, e.g., Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824
(7thCir. 2005); Assessment Technologies of Wisconsin, LLC v. WIREdata, Inc., 361 F.3d
434 (7thCir. 2004).
The district court denied Midwest's request for fees, ruling that it is not the prevailing
party. The judge wrote that he “did not in any way pass on the merits of the litigation....
[T]here has been no evidence of lack of merit to [Riviera's] copyright infringement claims and
no finding with respect to the merits of the case. The Court therefore does not believe that
[Midwest is] entitled to prevailing party status on the facts of this case.”
37 JCW Investments, Inc. v. Novelty, Inc., 482 F.3d 910, 914 (7thCir. 2007) (“The jury found
Novelty liable for trademark infringement for using the phrase ‘Pull My Finger’ to sell the farting
Santa dolls and found that Novelty’s conduct was willful and wanton, justifying an award of punitive
damages under Illinois's unfair competition law.”), JCW Investments, Inc. v. Novelty, Inc., 509 F.3d
339, 342 (7thCir. 2007) (“The strength of Tekky's case against Novelty weighs heavily in favor of
awarding fees, as the copyright infringement in this case was flagrant, see JCW Invs., 482 F.3d at 91617, and the trademark infringement was willful, ....”).
38
Boldface added by Standler.
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This approach supposes that the content of a judge's opinion is what makes a litigant a
prevailing party. If the judge sustains a litigant's position on the merits, then it “prevails”;
otherwise not. The Supreme Court took a different view in Buckhannon Board & Care Home,
Inc. v. West Virginia Dep't of Health & Human Resources, 532 U.S. 598, 121 S.Ct. 1835,
149 L.Ed.2d 855 (2001), which holds that a litigant “prevails” (for the purpose of fee-shifting
statutes) when it obtains a “material alteration of the legal relationship of the parties”, 532
U.S. at 604, 121 S.Ct. 1835, quoting from Texas State Teachers Ass'n v. Garland
Independent School District, 489 U.S. 782, 792-93, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989).
A judgment in a party's favor has such an effect, which is why a consent decree confers
prevailing-party status even though everyone denies liability as part of the underlying
settlement, and the judge takes no position on the merits.
Midwest obtained a favorable judgment. That this came about when Riviera threw in the
towel does not make Midwest less the victor than it would have been had the judge granted
summary judgment or a jury returned a verdict in its favor. Riviera sued; Midwest won; no
more is required.39 See Mother & Father v. Cassidy, 338 F.3d 704, 708 (7th Cir.2003)
(dismissal under Rule 41(a)(2), with prejudice, after a plaintiff gives up makes the defendant
the prevailing party). The district court recognized as much when it awarded costs to Midwest
under Fed.R.Civ.P. 54. Only the “prevailing party” is entitled to costs. Because Midwest is
the prevailing party for regular costs, it must be the prevailing party for the purpose of § 505,
which allows an award of attorneys' fees as part of costs.
What remains is the question whether this is an appropriate occasion for fee shifting. The
district judge thought not, writing that “the Court rejects the suggestion that [Riviera's] pursuit
of this action was frivolous, baseless, or objectively unreasonable.” This is not, however, the
standard for an award under § 505; it is the standard used under statutes such as 42 U.S.C. §
1988 that authorize an award to a prevailing defendant only if the suit is frivolous or
vexatious. Fogerty rejects such an asymmetric approach for § 505.
Is there any reason not to honor the presumption that the prevailing party, plaintiff or
defendant, recovers attorneys' fees under § 505? The district judge observed [Cite as: 517
F.3d at 929] that he denied Midwest's motion to dismiss the complaint, but that's a common
step on the way to a decision and not a good reason to force the prevailing party to swallow
the legal costs of the suit. The judge hinted that Midwest should be penalized for abandoning
an attempt at mediation, but any litigant is entitled to insist that its case be adjudicated.
Curtailing mediation actually held down the costs of defense. The district court also chastised
Midwest for delay in responding to Riviera's discovery requests. The judge would have been
within his rights to lop off any fees incurred to frustrate or drag out discovery, but an award of
zero for the case as a whole is not an appropriate response to the wrangling that is regrettably
common in discovery.
This case turns out to be an especially good candidate for fee shifting under § 505,
because it was filed in the teeth of an agreement not to sue. Riviera and Midwest have been at
each others' throats for years, and this is the second suit based on fundamentally the same
claim of infringement. Eventually the first suit was settled. One clause of the settlement
provides for alternative dispute resolution of any future claims:
In the event that either party hereto believes that its rights as to the Riviera [intellectual
property] Rights or Enhancements have been violated by [Midwest], then such source code
and programs shall be provided to a mutually agreeable, independent software expert who
shall inspect and review such applicable source code and programs and determine such
questions. The parties agree to be bound by the findings of the independent software expert.
Note by Standler: this sentence refers to controversy over who is the prevailing party, not to an
automatic decision to award attorney’s fees to the winner.
39
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Riviera says that, after the settlement, Midwest went right on infringing its copyrights.
But the point of a clause such as the one quoted above is to submit to an expert the question
whether any of Midwest's games uses Riviera's source code. Riviera can't justify this suit by
assuming an affirmative answer to the very question that the expert is supposed to decide.
When Midwest moved to dismiss Riviera's complaint, it brought this clause to the district
judge's attention. The judge's order denying the motion to dismiss does not mention Riviera's
agreement to have an expert, rather than a judge, resolve any controversy about infringement.
Perhaps the judge assumed that, because this agreement is not a traditional arbitration clause, it
is ineffectual. But we held in Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797
(7th Cir.2005), that agreements to engage in alternative dispute resolution must be enforced, if
they are valid as a matter of state contract law, whether or not they are aptly labeled
“arbitration.” In Omni Tech the agreement was one to have a financial dispute resolved by an
accountant; here the agreement is one to have a dispute about how software source code has
been used resolved by a programmer. There is no basis on which Omni Tech can be
distinguished — and Riviera does not even try. Its sole argument is that by asserting that
infringement has continued, it liberates itself from the agreement to have an expert resolve any
dispute about infringement.
Riviera came to the wrong forum. Agreements such as the one between Riviera and
Midwest are designed to reduce the price tag of decision-making. By filing another suit,
Riviera forced Midwest to bear the very expenses that the parties had agreed to avoid. The
party responsible for creating excessive legal costs must bear them itself in the end.
This conclusion makes it unnecessary to discuss the parties' other disputes, such as
whether by filing a second suit Riviera [Cite as: 517 F.3d at 930] entitled Midwest to an
award under 28 U.S.C. § 1927.
The judgment is reversed, and the case is remanded for an award of reasonable attorneys'
fees to Midwest under 17 U.S.C. § 505. The award should include the legal fees that Midwest
has incurred to vindicate its rights on appeal.
Riviera Distributors, Inc. v. Jones, 517 F.3d 926, 928-930 (7thCir. 2008) (Easterbrook, J.).
There are no further opinions in this case in Westlaw on 2 June 2010, so we do not know the final
outcome.
Assessment Technologies in 2004 established a very strong presumption that prevailing defendants
will be awarded attorney’s fees, and Woodhaven Homes in 2005 reiterated that holding.
In Riviera, Judge Easterbrook enlarged that presumption to any prevailing party (plaintiff or
defendant). But note that baseless litigation by plaintiff would justify awarding attorney’s fees to
prevailing defendant even under the pre-Fogerty law in the Second Circuit. Therefore, the result in
Riviera could easily be justified under old law, without any need for new rules.
Note that Judge Easterbrook, Chief Judge of the Seventh Circuit, rejected two of the factors in
Lieb:
What remains is the question whether this is an appropriate occasion for fee shifting. The
district judge thought not, writing that “the Court rejects the suggestion that [Riviera's] pursuit
of this action was frivolous, baseless, or objectively unreasonable.” This is not, however, the
standard for an award under [17 U.S.C.] § 505; it is the standard used under statutes such as
42 U.S.C. § 1988 that authorize an award to a prevailing defendant only if the suit is frivolous
or vexatious. Fogerty rejects such an asymmetric approach for § 505.
Riviera Distributors, Inc. v. Jones, 517 F.3d 926, 928 (7thCir. 2008).
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Note that “frivolous” and “objectively unreasonable” are words that appear in the Lieb factors that
were endorsed by the U.S. Supreme Court in Fogerty. This quotation from Riveria adds evidence
to my fear that the law in the Seventh Circuit is inconsistent with the U.S. Supreme Court and the
law in the other circuits.
Mostly Memories v. For Your Ease (2008)
In May 2008, the Seventh Circuit reversed a district court’s denial of attorney's fees to defendant.
The trial court dismissed the case on plaintiff’s motion, after plaintiff’s attorney concluded the case
was “completely baseless”.40 The Seventh Circuit wrote:
For Your Ease moved for attorney's fees under § 505 of the Copyright Act of 1976 and
section 1065/5 of the ITSA. See 17 U.S.C. § 505; 765 Ill. Comp. Stat.. 1065/5 (2004).
Section 505 authorizes an award of fees to the prevailing party in a suit under the Copyright
Act; the state statute permits an award of fees as a sanction for bad faith ITSA litigation.
Compare Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d
455 (1994) (concerning fee-shifting [Cite as: 526 F.3d 1099] under § 505), with 765 Ill.
Comp. Stat.. 1065/5 (the sanctioned party must have acted in “bad faith”). For Your Ease
also invoked the vexatious litigation statute, 28 U.S.C. § 1927, and the court's inherent
authority. The district court denied the motion without explanation.
While an award of attorney's fees under § 505 is entrusted to the district court's
discretion, FASA Corp. v. Playmates Toys, Inc., 108 F.3d 140, 141 (7th Cir.1997), we have
held that the prevailing party in Copyright Act litigation is presumptively entitled to an award
of fees under § 505, Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824-25 (7th
Cir.2005); Assessment Techs. of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 436-37 (7th
Cir.2004). In the case of prevailing defendants, we have described this presumption as “very
strong.” Assessment Techs., 361 F.3d at 437. There is no question that a dismissal with
prejudice makes the defendant the prevailing party for purposes of an award of attorney's fees
under § 505. Claiborne v. Wisdom, 414 F.3d 715, 719 (7th Cir.2005). This is no less true
when a case is dismissed because the plaintiff “threw in the towel” — that is, where the
dismissal is on the plaintiff's own motion. Riviera Distributors, Inc. v. Jones, 517 F.3d 926,
928 (7th Cir.2008).
The district court's summary ruling reflects no consideration of these principles. The
judge simply said Mostly Memories' conduct did not “warrant [ ] the imposition of
sanctions,” but the loser's conduct need not be “sanctionable” for the winner to be entitled to
attorney's fees under § 505. Id. For Your Ease was the prevailing party and is entitled to
an award of attorney's fees under the Copyright Act.41 Because For Your Ease is
entitled to reimbursement of its attorney's fees under § 505, we need not consider its
arguments for an award of fees under the ITSA, § 1927, or the court's inherent authority.
Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093, 1098-1099 (7thCir. 2008).
40
Mostly Memories, 526 F.3d at 1094-95.
41
Boldface added by Standler.
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This case continues the presumption established in Riviera that a prevailing party is entitled to
attorney’s fees. But note that baseless litigation by plaintiff would justify awarding attorney’s fees
to prevailing defendant even under the pre-Fogerty law in the Second Circuit. Therefore, the result
in Mostly Memories could easily be justified under old law, without any need for new rules.
On remand, the trial court awarded defendant For Your Ease Only $592,729.10 in attorneys
fees and defendant QVC, Inc. $90,946.25 in attorneys fees, for a total of $684,000. Mostly
Memories, Inc. v. For Your Ease Only, Inc., 594 F.Supp.2d 931 (N.D.Ill. 2009). The trial court
makes a terse remark about typical attorney's fees in copyright cases with more than one million
dollars in damages.
Moreover, although FYEO’s fee request is high, it is in line with other copyright cases; on
average, copyright cases in Chicago involving between $1-25 million in damages result in
$760,000 in fees incurred through the close of discovery.
Mostly Memories, Inc. v. For Your Ease Only, Inc., 594 F.Supp.2d at 935.
Eagle Services (2008)
In July 2008, Judge Posner wrote:
So we have a suit brought almost certainly in bad faith, a frivolous suit, a suit against a
newer and probably smaller and weaker firm. Under any standard we know for shifting
attorney's fees from a losing plaintiff to a winning defendant, H2O (and the individuals joined
as defendants along with it) would be entitled to an award of attorney's fees. E.g., Alyeska
Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258, 95 S.Ct. 1612, 44 L.Ed.2d
141 (1975); Chambers v. NASCO, Inc., 501 U.S. 32, 46, 111 S.Ct. 2123, 115 L.Ed.2d 27
(1991); IDS Life Ins. Co. v. Royal Alliance Associates, Inc., 266 F.3d 645, 654 (7th
Cir.2001). Under the standard for such shifting in a copyright case, the defendants'
entitlement is even stronger. The Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517,
534, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994), said that, unlike the rule in an employment
discrimination case, where the plaintiff is presumptively entitled to his attorney's fees if he
wins but the defendant only if the suit was frivolous, in copyright suits “prevailing plaintiffs
and prevailing defendants are to be treated alike.” That is why we concluded in Assessment
Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437 (7th Cir.2004), that “when
the prevailing party is the defendant, who by definition receives not a small award but no
award, the presumption in favor of awarding fees is very strong.” See also Mostley
Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093, 1099 (7th Cir.2008); Riviera
Distributors, Inc. v. Jones, 517 F.3d 926, 927-29 (7th Cir.2008); Woodhaven Homes &
Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir.2005). The conclusion is implicit in the
Supreme Court's directive in Fogerty to treat the parties to a copyright case symmetrically.
If the only thing disturbing the symmetry is that the defendant prevailed, it is presumptively
entitled to an award of its reasonable attorney's fees. Here, of course, the presumption is not
rebutted, but instead is reinforced, by the considerations that we have reviewed.
Yet Murray Hill Publications, Inc. v. ABC Communications, Inc., 264 F.3d 622, 640
(6th Cir.2001), disregarding Fogerty, says (and is not alone in saying) that “because we
believe the plaintiffs presented [Cite as: 532 F.3d at 625] one or more colorable, albeit
meritless, claims to the district court, we reverse the award of attorneys fees” to the defendant.
Such decisions (criticized in 6 Patry, supra, § 22:210, pp. 469-70), by treating a copyright case
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as if it were an employment discrimination case, ignore the symmetry of interests in a
copyright or other intellectual property case. In the typical copyright case a victory for the
defendant enlarges the public domain by denying the plaintiff's right to prevent the defendantor anyone else-from using the intellectual property alleged to infringe the plaintiff's copyright.
The public domain is “an important resource for creators of expressive works and therefore
there should be no thumb on the scales” in deciding whether to award attorneys' fees.
Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 609 (7th Cir.2002); see also
Assessment Technologies of WI, LLC v. WIREdata, Inc., supra, 361 F.3d at 436.
If there is an asymmetry in copyright, it is one that actually favors defendants. The
successful assertion of a copyright confirms the plaintiff's possession of an exclusive, and
sometimes very valuable, right, and thus gives it an incentive to spend heavily on litigation.
In contrast, a successful defense against a copyright claim, when it throws the copyrighted
work into the public domain, benefits all users of the public domain, not just the defendant; he
obtains no exclusive right and so his incentive to spend on defense is reduced and he may be
forced into an unfavorable settlement.
This case is atypical, because the defendants did not succeed in forcing the plaintiff's
manuals into the public domain. But there is nothing in the cases to suggest that the thumb is
to be taken off the scales only when a defendant by his successful defense enlarges the public
domain. That would be cutting things too fine. The presumption in a copyright case is that
the prevailing party (though if it is the plaintiff, only if his copyright had been registered,
17 U.S.C. § 412; Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 733 (7th
Cir.1996)) receives an award of fees. Gonzales v. Transfer Technologies, Inc., supra, 301
F.3d at 610; see also Hogan Systems, Inc. v. Cybresource Int'l, Inc., 158 F.3d 319, 325 (5th
Cir.1998); McGaughey v. Twentieth Century Fox Film Corp., 12 F.3d 62, 65 (5th Cir.1994).
The presumption has not been rebutted.
The judgment is therefore reversed and the case remanded with instructions to compute
and award reasonable attorney's fees to the defendants.
Eagle Services Corp. v. H2O Industrial Services, Inc., 532 F.3d 620, 624-625 (7thCir. 2008)
(Posner, J.). There are no further opinions in this case in Westlaw on 2 June 2010, so we do not
know the final outcome. Note that frivolous litigation by plaintiff would justify awarding
attorney’s fees to prevailing defendant even under the pre-Fogerty law in the Second Circuit.
Therefore, the result in Eagle Services could easily be justified under old law, without any need for
new rules.
Lieb factors in Seventh Circuit
before Assessment Technologies (March 2004)
A string of five Seventh Circuit cases in eight years before Assessment Technologies cited the Lieb
factors:
• Budget Cinema, Inc. v. Watertower Associates, 81 F.3d 729, 731 (7thCir. 1996) (“The [U.S.
Supreme] Court [in Fogerty, 510 U.S. 517 (1994)] stated that no precise formula governs the
determination, but instead equitable discretion should be exercised. Id. [114 S.Ct.] at 1033.
It noted several nonexclusive factors to guide courts' discretion: frivolousness, motivation,
objective unreasonableness (both factual and legal components), and the need in particular
circumstances to advance considerations of compensation and deterrence. Id. at 1033 n. 19.
We endorse these factors along with the other courts of appeals that have applied Section 505
post-Fogerty. [citations to four cases omitted]”);
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•
FASA Corp. v. Playmates Toys, Inc., 108 F.3d 140, 143 (7thCir. 1997);
•
Harris Custom Builders, Inc. v. Hoffmeyer, 140 F.3d 728, 730 (7thCir. 1998) (“The
Supreme Court did not precisely articulate what should guide a district judge's exercise of that
discretion. It did, however, cite Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3rdCir.
1986), with approval in a footnote, for a nonexclusive list of factors which could be
considered. They include ‘frivolousness, motivation, objective unreasonableness (both in the
factual and in the legal components of the case) and the need in particular circumstances to
advance considerations of compensation and deterrence.’ 510 U.S. at 534 n. 19, 114 S.Ct. at
1033 n. 19.”);
•
Harris Custom Builders, Inc. v. Hoffmeyer, Unpublished, 1999 WL 417865 at *1 (7thCir.
1999) (“Factors guiding the exercise of discretion may include frivolousness, motivation,
objective unreasonableness, and deterrence. Lieb v. Topstone Indus., Inc., 788 F.2d 151
(3dCir. 1986).”);
•
Susan Wakeen Doll Co., Inc. v. Ashton Drake Galleries, 272 F.3d 441, 457 (7thCir. 2001)
(“In utilizing its discretion to award attorney's fees under 17 U.S.C. § 505, a court should
consider such non-exclusive factors as ‘frivolousness, motivation, objective unreasonableness
(both in the factual and in the legal components of the case) and the need in particular
circumstances to advance considerations of compensation and deterrence.’ Harris Custom
Builders, Inc. v. Hoffmeyer, 140 F.3d 728, 730 (7thCir. 1998) (quoting Fogerty v. Fantasy,
Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)).”);
•
McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 571 (7thCir. 2003) (“When a
court exercises its discretion to award attorney's fees under [17 U.S.C.] § 505 it should
consider such non-exclusive factors as ‘frivolousness, motivation, objective unreasonableness
(both in the factual and in the legal components of the case) and the need in particular
circumstances to advance considerations of compensation and deterrence.’ Harris Custom
Builders, Inc. v. Hoffmeyer, 140 F.3d 728, 730 (7thCir. 1998) (quoting Fogerty v. Fantasy,
Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)).”).
Gonzales and Assessment Technologies
In August 2002, Judge Posner criticized the Lieb factors:
The Court in Fogerty .... ... did not define the unitary standard to be applied to prevailing
parties in copyright suits but in a footnote, quoting a lower-court opinion, listed the following
nonexclusive factors to guide determination: “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the need in
particular circumstances to advance consideration of compensation and deterrence.” Fogerty
v. Fantasy, Inc., supra, 510 U.S. at 535 n. 19.
Since the factors aren’t exclusive, and seem rather miscellaneous and ill-assorted, they
leave the decision on whether to grant or deny attorneys’ fees to the prevailing party in a
copyright case pretty much to the discretion of the district judge, subject to necessarily highly
deferential appellate review — for the vaguer a standard to be applied by a trial judge, the
greater his roaming room.
Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 609 (7thCir. 2002) (Posner, J.).
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In Gonzales (2002) and Assessment Technologies (2004), Judge Posner wrote his own
factors, and then the Seventh Circuit apparently departed from the Lieb factors endorsed by the
U.S. Supreme Court in Fogerty. However — and this is important — the results in Gonzales and
progeny (with the possible exception of Woodhaven) are easy to justify using the Lieb factors or
other pre-Fogerty law, so Posner’s presumptions are not necessary to the result in each of these
cases.
When Judge Posner introduced the presumption in attorney fee shifting in Seventh Circuit
copyright cases, he specifically said that the presumption was “by way of refinement of the
Fogerty standard”. Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437
(7thCir. 2004) (Posner, J.) (quoting Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 610
(7thCir. 2002) (Posner, J.)).
However, the Seventh Circuit seems to have generally ignored the four Lieb factors after
Assessment Technologies. Instead, the Seventh Circuit asserts that two factors — neither of which
is mentioned in Lieb or McCulloch — are most important to consider in attorney fee shifting in
copyright cases:
The two most important considerations in determining whether to award attorneys’ fees
in a copyright case are the strength of the prevailing party’s case and the amount of damages
or other relief the party obtained.
Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 436 (7thCir. 2004).
Reiterated in JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007).
Because a prevailing defendant receives zero damages, there is a “very strong presumption” that a
prevailing defendant will be awarded attorney’s fees. Assessment Technologies, 361 F.3d at 437.
after Assessment Technologies (March 2004)
In September 2011, only two Seventh Circuit cases in the eight years after Assessment
Technologies quote the four Lieb factors:
• Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7thCir. 2005) (District Court
used Lieb factors. “But in the time period since the district court’s decision, we issued an
opinion [Assessment Technologies] clarifying the Fogerty standard.”);
•
JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007) (“That discretion [to
award attorney's fees] is guided by many factors, including” the factors in Lieb.).
In September 2011, only one reported case from the U.S. District Court in Illinois has used the
four Lieb factors after Assessment Technologies: Bryant v. Gordon, 503 F.Supp.2d 1062, 1067
(N.D.Ill. 2007) (“With this standard in mind, the Court denies ... requests for attorney’s fees,
....”).
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While the four factors in Lieb are not commonly used in the Seventh Circuit after Assessment
Technologies, individual factors continue to be used in the Seventh Circuit, although generally
without citation to Lieb or Fogerty. For example, Judge Posner’s concern about the amount of
damages obtained by the prevailing party is consistent with “considerations of compensation” in
Lieb. Searches of Seventh Circuit cases in Westlaw find the continuing use of key words (e.g.,
frivol! motiv! unreasonabl! deterrence ) from Lieb:
• JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007) ("That discretion [in
17 U.S.C. § 505] is guided by many factors, including “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the need in
particular circumstances to advance considerations of compensation and deterrence.” Fogerty
v. Fantasy, Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) (internal
quotation omitted).");
•
Eagle Services Corp. v. H2O Industrial Services, Inc., 532 F.3d 620, 623-624 (7thCir. 2008)
(“frivolous”);
•
Johnson v. Cypress Hill, 641 F.3d 867, 873 (7thCir. 2011) (“the claim was frivolous and
objectively unreasonable”).
Searches of Seventh Circuit cases in Westlaw find the continuing use of key words or concepts
from McCulloch, but without citing McCulloch:
• JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007) (“... the copyright
infringement in this case was flagrant, see JCW Invs., 482 F.3d [910] at 916–17, ....”)
•
Eagle Services Corp. v. H2O Industrial Services, Inc., 532 F.3d 620, 624 (7thCir. 2008) (“So
we have a suit brought almost certainly in bad faith, ....”);
•
Kelley v. Chicago Park District, 635 F.3d 290, 291 (7thCir. 2011) (“... the main event here is
the VARA claim, which is novel and tests the boundaries of copyright law.” Apparently no
award of attorney's fees, because not an issue on appeal.).
Because of this continuing use of individual Lieb factors in the Seventh Circuit, I suggest that
the four Lieb factors (endorsed by the U.S. Supreme Court in Fogerty) — or the individual factors
in McCulloch — is the way to rebut the presumption in Assessment Technology and its progeny.
If my suggestion is wrong, then there is an obvious question of how to rebut the presumption in
Assessment Technologies and it clearly is a rebuttable presumption.
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prevailing defendant in 7th Circuit
The law in the Seventh Circuit has a “very strong presumption” that a prevailing defendant in
a copyright case will be awarded fees. By August 2011, this law is expressed in a string of eight
cases at the Seventh Circuit:
8. Johnson v. Cypress Hill, 641 F.3d 867, 873 (7thCir. 2011) (“See also, Woodhaven Homes &
Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir. 2005) (quoting Assessment Technologies of
WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437 (7thCir. 2004)) (‘When the prevailing party is
the defendant, who by definition receives not a small award but no award, the presumption in
favor of awarding fees is very strong’).”);
7.
HyperQuest, Inc. v. N'Site Solutions, Inc., 632 F.3d 377, 387 (7thCir. 2011) (Wood, J.)
(“Defendants who defeat a copyright infringement action are entitled to a strong presumption
in favor of a grant of fees. Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d
1093, 1099 (7thCir. 2008).”);
6.
FM Industries, Inc. v. Citicorp Credit Services, Inc., 614 F.3d 335, 339 (7thCir. 2010)
(Easterbrook, J.) (“... a defendant that prevails in copyright litigation is presumptively entitled
to fees under § 505. See Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093,
1099 (7thCir. 2008).”);
5.
Eagle Services Corp. v. H2O Industrial Services, Inc., 532 F.3d 620, 624 (7thCir. 2008)
(Posner, J.) (“... we concluded in Assessment Technologies of WI, LLC v. WIREdata, Inc.,
361 F.3d 434, 437 (7thCir. 2004), that ‘when the prevailing party is the defendant, who by
definition receives not a small award but no award, the presumption in favor of awarding fees
is very strong.’ ”);
4.
Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093, 1099 (7thCir. 2008)
(“In the case of prevailing defendants, we have described this presumption as ‘very strong.’
Assessment Techs., 361 F.3d at 437.”);
3.
Riviera Distributors, Inc. v. Jones, 517 F.3d 926, 928 (7thCir. 2008) (Easterbrook, J.)
(“Since Fogerty we have held that the prevailing party in copyright litigation is presumptively
entitled to reimbursement of its attorneys' fees.”);
2.
Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir. 2005) (quoting
Assessment Technologies);
1.
Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437 (7thCir. 2004))
(Posner, J.) (“When the prevailing party is the defendant, who by definition receives not a
small award but no award, the presumption in favor of awarding fees is very strong”);
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0.
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Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 610 (7thCir. 2002) (Posner, J.)
(“... we go so far as to suggest, by way of refinement of the Fogerty standard, that the
prevailing party in a copyright case in which the monetary stakes are small should have a
presumptive entitlement to an award of attorneys' fees.”).
Note that Assessment Technologies and progeny are binding precedent in the Seventh Circuit.
Above, at page 46, I argue that this rule in Assessment Technologies violates both the statute and
the U.S. Supreme Court opinion in Fogerty. However, in my opinion, it would be futile to argue
with this law in the Seventh Circuit, unless one is prepared to appeal to the U.S. Supreme Court
that the rule in Assessment Technologies and progeny is wrong.
My legal research shows that the Seventh Circuit is the worst place in the USA for a plaintiff
to lose a copyright case, because of this very strong presumption that a prevailing defendant’s
attorney’s fees will be reimbursed by plaintiff.
Ability to pay fees
In my searches of copyright cases on attorney’s fees in May/June 2010, I found that the
general rule is that judges order reimbursement of actual fees paid, unless there is a good argument
why those fees are unreasonable. The general rule in copyright cases seems to be for judges to
ignore ability to pay, which is a harsh rule of law. See, e.g., Mitek Holdings, Inc. v. Arce
Engineering Co., Inc., 198 F.3d 840, 843 (11th Cir.1999) (“The decision to award attorney’s fees
is based on whether imposition of the fees will further the goals of the Copyright Act, not on
whether the losing party can afford to pay the fees.”).
Agee (1994)
In November 1994, a U.S. District Court in New York City awarded defendant $24,722
attorney’s fees in a copyright case that was dismissed on summary judgment for defendant. Note
that defendant was a huge corporation and plaintiff was an individual person.
The manner in which plaintiff proceeded in this action leads the court to conclude that
plaintiff's strategy was to escalate the costs for Paramount and to harass this defendant by
naming more than 100 defendants from around the country over which this Court has no
jurisdiction, making numerous infringement claims, reframing infringement claims as
Lanham Act claims contrary to established case law and demanding damages far in excess of
the statutory limitations.
This court refuses to attempt to limit the language of Fogerty to apply to defendant
copyright holders as plaintiff suggests. The court does not consider the speculative effects of
such an award of attorney's fees and costs as awarded herein on the financial condition of
plaintiff as a decisive factor. While the financial condition of the losing party can be
considered in awarding attorney's fees to the prevailing party, Lieb v. Topstone Industries,
Inc., 788 F.2d 151, 156 (3d Cir.1986) (cited in Fogerty, 510 U.S. at ----, n. 19, 114 S.Ct. at
1033 n. 19), Agee has not submitted any proof, although requested to by the court, that this
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award would lead to his financial ruin. He elected to plead poverty without proof. The
Second Circuit has noted that, “where the plaintiff can afford to pay, of course, the
Congressional goal of discouraging frivolous litigation demands full fees be levied.” Faraci v.
Hickey-Freeman Co., Inc., 607 F.2d 1025, 1028 (2d Cir.1979) (examining the similar
language of 42 U.S.C. § 1988 regarding awarding attorney's fees to successful defendants in
civil rights actions.).
In the alternative, this court bases the award of attorney's fees and costs made herein on
its inherent power and on 28 U.S.C. § 1927 which imposes excess costs and attorney's fees
on an attorney who “multiplies the proceedings in any case unreasonably and vexatiously.”
As an exception to the American Rule, the inherent power of the court allows the court to
award reasonable attorneys' fees to the prevailing party when the opposing party has “acted in
bad faith, vexatiously, wantonly, or for oppressive reasons.” Oliveri v. Thompson, 803 F.2d
1265, 1272 (2d Cir.1986) (citing to F.D. Rich Co., Inc. v. United States ex rel. Industrial
Lumber Co., Inc., 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974)); United
States v. International Brotherhood of Teamsters, 948 F.2d 1338, 1345 (2d Cir.1991); Wood
v. Brosse U.S.A., Inc., 149 F.R.D. 44, 48 (S.D.N.Y.1993); Mopaz Diamonds v. Institute of
London Underwriters, 822 F.Supp. 1053, 1057 (S.D.N.Y.1993).
Agee v. Paramount Communications, Inc., 869 F.Supp. 209, 211-212 (S.D.N.Y. 1994),
appeal dismissed, 114 F.3d 395, 398 (2dCir. 1997) (“A district court has ‘inherent power’ to
award attorneys' fees against the offending party and his attorney when it determines a party has
‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’ Sierra Club v. U.S. Army
Corps of Engineers, 776 F.2d 383, 390 (2dCir. 1985)”).
Lotus v. Borland (1998)
In 1998, a U.S. Court of Appeals in Massachusetts wrote:
Borland now contends that the district court erred by ignoring Lotus's alleged anticompetitive purposes in bringing the litigation, relying impermissibly on Borland's refusal to
settle the case, and discounting the importance of encouraging copyright defendants to assert
meritorious defenses. Borland notes that it advanced the interests of copyright law by litigating
this case all the way through the Supreme Court against an unusually wealthy plaintiff. It also
contends that the “vindication” of its own copyright in Quattro Pro increased the availability
of copyrighted works. Borland concludes that “if ever there were a situation where the
assertion of meritorious defenses should be encouraged, it is a case involving issues of first
impression.”
None of these contentions provides a basis for overriding the denial of fees and costs.
Both sides proffered evidence on the issue of whether Lotus had intended to use this litigation
to bankrupt Borland and thus maintain its dominant position in the spreadsheet
market.[footnote omitted] We cannot say, on the record before [Cite as: 140 F.3d at 75] us,
that the presence of an impermissible motive on Lotus's part is so clear that a contrary
conclusion could not reasonably be reached. After all, copyright law often delineates the
boundaries of economic competition. See, e.g., Feist Publications, Inc. v. Rural Tel. Service,
499 U.S. 340, 349, 111 S.Ct. 1282, 1289-90, 113 L.Ed.2d 358 (1991) (holding that the
plaintiff's telephone directory lacked originality and thus copyright law did not bar defendant
from copying the information to create a competing product). Arguably, there is nothing
inherently improper about bringing a claim that is well-founded in law and fact against one's
competitors, even when legal action, if successful, will inflict severe economic consequences
upon them.
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....
Turning to the need to encourage meritorious defenses, a copyright defendant's success
on the merits in a case of first impression may militate in favor of a fee award, but we are
unwilling to hold that a successful defense in an important case necessarily mandates an
award of attorney's fees. When close infringement cases are litigated, copyright law
benefits from the resulting clarification of the doctrine's boundaries. But because novel
cases require a plaintiff to sue in the first place, the need to encourage meritorious
defenses is a factor that a district court may balance against the potentially chilling
effect of imposing a large fee award on a plaintiff, who, in a particular case, may have
advanced a reasonable, albeit unsuccessful, claim.42 Fogerty made clear that courts are to
evaluate cases on an individualized basis, with the primary responsibility resting on the
shoulders of the district judge. Regardless of whether we would have approached the matter
similarly, we are unable to say that the district court's analysis strikes us as an abuse of that
discretion.
Borland's final contentions — that the district court erred by ignoring Borland's
“vindication” of its own copyrighted computer program and Lotus's unusual wealth — are
unpersuasive. As a basis for awarding fees, we see no meaningful distinction between
Borland's vindication of its own copyrighted work and its assertion of a meritorious defense.
The latter necessarily implies the former. In addition, the district court supportably found that
both parties were financially able to litigate this important case. Lotus's unusual wealth in no
way alters this conclusion.
Lotus Development Corp. v. Borland Intern., Inc., 140 F.3d 70, 74-75 (1stCir. 1998).
MiTek (1999)
In 1999, a U.S. Court of Appeals in Alabama wrote:
Here, the magistrate judge was correct in noting that MiTek's good faith in bringing its
suit was not determinative of the issue of attorney's fees. See Sherry Mfg. Co., 822 F.2d at
1034; see also Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F.2d 821, 832
(11th Cir.1982) (applying § 505 to a prevailing plaintiff's fees demand; “While the defendant's
good faith and the complexity of the legal issues involved likely would justify a denial of fees
to a successful plaintiff, a showing of bad faith or frivolity is not a requirement of a grant of
fees. Rather, the only preconditions to an award of fees is that the party receiving the fee be the
‘prevailing party’ and that the fee be reasonable.”) (citation omitted; emphasis in original).
However, the district court erred in considering only the financial means of MiTek and of
Arce in determining that MiTek should be liable for Arce's attorney's fees.
While several courts have held that issues of compensation may, in appropriate cases, be
considered in ruling on a motion for attorney's fees, see, e.g., Rosciszewski v. Arete Assoc.,
1 F.3d 225, 234 (4th Cir.1993); Lieb, 788 F.2d at 156, we have found no case affirming a
grant of attorney's fees based solely on an economic disparity between the prevailing and
losing parties. Indeed, the First Circuit has held that differences in financial wealth are
irrelevant where both parties are able to pay for the costs of litigation. See Lotus Dev. Corp. v.
Borland Int'l Inc., 140 F.3d 70, 75 (1st Cir.1998). It is unsurprising that no case law supports
the proposition that a difference in financial wealth, in and of itself, is sufficient to justify
42
Boldface added by Standler.
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imposition of attorney's fees under § 505. The touchstone of attorney's fees under § 505 is
whether imposition of attorney's fees will further the interests of the Copyright Act, i.e., by
encouraging the raising of objectively reasonable claims and defenses, which may serve not
only to deter infringement but also to ensure “that the boundaries of copyright law [are]
demarcated [Cite as: 198 F.3d at 843] as clearly as possible” in order to maximize the
public exposure to valuable works. Fogerty, 510 U.S. at 526-27, 114 S.Ct. at 1029-30
(discussing the varied goals of the Copyright Act); see also Lotus Dev., 140 F.3d at 75
(“When close infringement cases are litigated, copyright law benefits from the resulting
clarification of the doctrine's boundaries. But because novel cases require a plaintiff to sue in
the first place, the need to encourage meritorious defenses is a factor that a district court may
balance against the potentially chilling effect of imposing a large fee award on a plaintiff, who,
in a particular case, may have advanced a reasonable, albeit unsuccessful, claim.”). Thus, in
determining whether to award attorney's fees under § 505, the district court should
consider not whether the losing party can afford to pay the fees but whether imposition
of fees will further the goals of the Copyright Act.43 See, e.g., id. at 74 (affirming denial of
attorney's fees despite the claim that the prevailing defendant had “advanced the interest of
copyright law by litigating this case all the way through the Supreme Court against an
unusually wealthy plaintiff” and had “increased the availability of copyrighted works”).
Because the district court did not assess whether imposition of attorney's fees would further
the goals of the Copyright Act, we vacate the district court's order as to the award of attorney's
fees and remand for reevaluation of Arce's fee request. [footnote omitted]
MiTek Holdings, Inc. v. Arce Engineering Co., Inc., 198 F.3d 840, 842-843 (11thCir. 1999).
The boldfaced sentence in MiTek was quoted with approval outside the Eleventh Circuit in:
• Harrison Music Corp. v. Tesfaye, 293 F.Supp.2d 80, 85 (D.D.C. 2003) (“The decision to
award attorney’s fees is based on whether imposition of the fees will further the goals of the
Copyright Act, not on whether the losing party can afford to pay the fees. Mitek Holdings, Inc.
v. Arce Engineering Co., Inc., 198 F.3d 840, 843 (11th Cir.1999).”);
•
Penguin Books U.S.A., Inc. v. New Christian Church of Full Endeavor, Ltd., Not Reported in
F.Supp.2d, 2004 WL 728878 at *6 (S.D.N.Y. 2004) (same).
•
Chivalry Film Productions v. NBC Universal, Inc., Not Reported in F.Supp.2d,
2007 WL 4190793 at *3 (S.D.N.Y. 2007) (same).
other copyright cases in the U.S. Courts of Appeals
On 3-4 May 2010, I searched all federal cases, nationwide, for copyright cases involving
attorney’s fee awards that would be burdensome to the payor. The following cases considered the
ability of a party to pay shifted attorney’s fees.
•
Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3dCir. 1986) (“We emphasize that the
aims of the statute are compensation and deterrence where appropriate, but not ruination.”).
43
Boldface added by Standler.
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•
Fantasy v. Fogerty, 94 F.3d 553, 560 (9thCir. 1996) (After remand from U.S. Supreme
Court: “... the chilling effect of attorney’s fees may be too great or impose an inequitable
burden on an impecunious plaintiff; ....”);
•
FASA Corp. v. Playmates Toys, Inc., 1 F.Supp.2d 859, 866 (N.D.Ill. 1998) (“In Sanford v.
CBS, Inc., 108 F.R.D. 42, 43 (N.D.Ill. 1985), Judge Aspen denied fees to a prevailing
defendant in a similar situation because ‘it would be inequitable to force [plaintiff] into
financial ruin for bringing in good faith what appeared to be a legitimate copyright claim.’ ”).
•
Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763, 766 (9thCir. 2003) (“The Ninth Circuit has
added as additional considerations ... whether the chilling effect of attorney’s fees may be too
great or impose an inequitable burden on an impecunious plaintiff. Fantasy, Inc. v. Fogerty,
94 F.3d 553, 559-60 (9thCir. 1996).”). The word impecunious also appears in the U.S.
Supreme Court’s opinion, Fogerty, 510 U.S. at 524 (1994).
•
Vargas v. Pfizer, Inc., 352 Fed.Appx. 458, 460 (2dCir. 2009) (“Plaintiffs’ contention that the
attorneys’ fees award was inappropriate because it will cause them financial ruin similarly is
to no avail. The district court carefully considered Plaintiffs' financial situation before
awarding fees, and it specifically noted that it was awarding [$175,000] an amount
significantly below what would have been reasonable under the lodestar method because such
an award — $797,000 — would threaten Plaintiffs with financial ruin. We see no error in the
district court’s decision.”).
inability to pay in other areas of civil law
While ability to pay attorney’s fees is not commonly mentioned in copyright cases, the ability
to pay is commonly considered in other kinds of cases involving attorney fee shifting.
For example, since the early 1980s, the Seventh Circuit has a five-part test of equitable
considerations for attorney fee shifting, which is discussed below, beginning at page 99.
In July 2011, I searched Westlaw for all cases in the U.S. Courts of Appeals, nationwide, for the
following broad query back to January 1990:
(afford! able! unafford! unable inability) /s pay /s
((attorney! counsel!) +1 fee)
This broad query was intended to dredge up financial considerations in many different contexts,
not only copyright cases. I found the following interesting cases:
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In civil rights cases under 42 U.S.C. § 1988 or 42 U.S.C. § 2000e-5(k), the inability of
plaintiff to pay attorney's fees to prevailing defendant is a factor to consider in the amount of an
award of attorney’s fees. See, e.g.,
• Faraci v. Hickey-Freeman Co., Inc., 607 F.2d 1025, 1028 (2dCir. 1979) (“But because fee
awards are at bottom an equitable matter, courts should not hesitate to take the relative wealth
of the parties into account. [citations omitted]”);
•
Munson v. Friske, 754 F.2d 683, 697 (7thCir. 1985) (“The courts have held that fee awards
are an equitable matter, thereby permitting the district court to consider the relative wealth of
the parties. See, e.g., Faraci v. Hickey-Freeman Co., 607 F.2d 1025, 1028 (2dCir. 1979).”
Affirmed award of $42,095 in attorneys’ fees.);
•
Wolfe v. Perry, 412 F.3d 707, 723-724 (6thCir. 2005) (“All the courts of appeals which have
addressed the issue have concluded that a nonprevailing plaintiff’s ability to pay is not
‘a proper factor to consider in determining whether to award attorneys' fees against [the
plaintiff],’ but may be considered when determining the amount of the attorneys’ fees to be
awarded against that party. Alizadeh v. Safeway Stores, Inc., 910 F.2d 234, 238 (5thCir.
1990); see also [citing seven other cases in U.S. Courts of Appeals]”);
•
Roth v. Green, 466 F.3d 1179, 1194 (10thCir. 2006) (adopting Wolfe v. Perry).
Similarly with fee shifting under the Americans with Disabilities Act, 42 U.S.C. § 12205. Adkins
v. Briggs & Stratton Corp., 159 F.3d 306, 307-308 (7thCir. 1998) (“In exercising its discretion,
the court is free to weigh equitable considerations (including the employee’s ability to pay) and to
award a nominal fee — or even no fee — if the court, for acceptable reasons, deems it
appropriate.”).
There is a long line of cases on shifting attorney’s fees in Employee Retirement Income
Security Act (ERISA) cases that mention a five-part test, of which one factor is ability to pay.
See, e.g.,
• Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9thCir. 1980) (“the ability of the opposing
parties to satisfy an award of fees”);
• Nichol v. Pullman Standard, Inc., 889 F.2d 115, 121, n.9 (7thCir. 1989) (“the degree of the
ability of the offending parties to satisfy personally an award of attorneys’ fees”.);
• Hardt v. Reliance Standard Life Insurance Co., 130 S.Ct. 2149, 2155, n.1, n.8 (2010)
(“ability of opposing parties to satisfy an award of attorneys’ fees”).
This line of cases in the Seventh Circuit is discussed below, beginning at page 99. As of
September 2011, only one U.S. Court of Appeals opinion has mentioned both the five-part test for
ERISA cases and Lieb factors in copyright cases: Eddy v. Colonial Life Ins. Co. of America,
59 F.3d 201, 204, 206 (D.C.Cir. 1995) (Hummell factors).
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need evidence in trial court
A case in the District of Columbia trial court in January 2009 ordered a pro se plaintiff to pay
defendant’s attorney’s fees. The trial court cited Assessment Tech in the Seventh Circuit for the
“very strong” presumption that a prevailing defendant should receive an award of attorney’s fees
and MiTek Holdings in the Eleventh Circuit for the proposition that “the underlying purposes of
the Copyright Act are served by awarding attorneys' fees to deter unnecessary and protracted
proceedings, thereby encouraging objectively reasonable claims.” The trial court wrote:
Turning to the amount to be awarded, the court multiplies the “number of hours
reasonably expended on the litigation” by “a reasonably hourly rate.” Harrison Music Corp.
v. Tesfaye, 293 F.Supp.2d 80, 85 (D.D.C.2003). The defendants submit a voluminous
account of the hours worked on this matter with accompanying hourly rates and
documentation to support the reasonableness of those rates. Metalitz Decl., Attachs. 1-5.
The billing reports indicate that the fees incurred in defense of the instant action totaled
$144,668.99 with nontaxable costs of $1,000.88. Defs.' Mot. at 20-22. In response, the
plaintiff summarily concludes that the fees are “excessive, outrageous and well beyond
reasonable.” Pl.'s Opp'n at 3. FN1
FN1. The plaintiff also states that she is of “modest financial means.” Id. Although the
court is mindful that “the aims of the [Copyright Act] are compensation and deterrence
where appropriate, but not ruination,” Lieb, 788 F.2d at 156, the court has no basis on
which to determine the plaintiff's financial footing. Therefore, this factor does not affect
the court's analysis. Mallery v. NBC Universal, Inc., 2008 WL 719218, at *2 (S.D.N.Y.
Mar. 18, 2008) (discounting the plaintiffs' argument that the award should be reduced due
to financial hardship because they failed to offer documentary support).
Scott-Blanton v. Universal City Studios Productions LLLP, 593 F.Supp.2d 171, 176 (D.D.C.
2009). Turning to Mallery — cited in the footnote of Scott-Blanton — Mallery says “While it is
not contested that the relative financial status of the parties may be an appropriate consideration in
determining whether an award under § 505 is reasonable, [citation omitted] unsupported affidavits
are insufficient to alter the analysis in this case.” Perhaps the real lesson of Scott-Blanton and
Mallery is that impecunious plaintiffs should file copies of their federal income tax returns and
other relevant financial documents, with their affidavit about being unable to reimburse defendant’s
attorney’s fees.
analogy to criminal law
I am disappointed to find so few opinions that discuss a party ability to reimburse attorney’s
fees of the opposition. However, there is an analogous issue in criminal law, where it is well
established that a judge can not impose unaffordable fines on a criminal defendant. The Eighth
Amendment to the U.S. Constitution explicitly prohibits excessive fines (“... nor excessive fines
imposed ....”). The federal sentencing guidelines during the 1990s made ability to pay and burden
to the defendant and his dependents relevant criteria in determining the amount of a fine:
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In determining the amount of the fine, the court shall consider: ... (2) any evidence presented
as to the defendant's ability to pay the fine (including the ability to pay over a period of time)
in light of his earning capacity and financial resources; (3) the burden that the fine places on
the defendant and his dependents relative to alternative punishments; ....
Sentencing Guidelines §5E1.2(d). Quoted in U.S. v. Petty, 132 F.3d 373, 382, n.3 (7thCir. 1997).
See also U.S. v. Riley, 493 F.3d 803, 810, n.11 (7thCir. 2007) (U.S. Sentencing Guideline
§ 5E1.2(a) provides: “The court shall impose a fine in all cases, except where the defendant
establishes that he is unable to pay and is not likely to become able to pay any fine.”). Similarly,
the federal criminal statute about the amount of fines says:
In determining whether to impose a fine, and the amount, time for payment, and method
of payment of a fine, the court shall consider, in addition to the factors set forth in section
3553(a) —
(1) the defendant's income, earning capacity, and financial resources;
(2) the burden that the fine will impose upon the defendant, any person who is financially
dependent on the defendant, or any other person (including a government) that would be
responsible for the welfare of any person financially dependent on the defendant, relative
to the burden that alternative punishments would impose;
18 U.S.C. § 3572(a), imposition of a sentence of fine and related matters. (current July 2011).
However, the Eighth Amendment does not apply to civil cases. Browning-Ferris Industries
of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 264 (1989) (The Eighth Amendment
“does not constrain an award of money damages in a civil suit when the government neither has
prosecuted the action nor has any right to receive a share of the damages awarded.”). Quoted with
approval in Exxon Shipping Co. v. Baker, 554 U.S. 471, 504, n.18 (2008). Still, one wonders
why criminals are protected from judgments they can not afford to pay, while the losing plaintiff in
a copyright case — who is neither a criminal nor a tortfeasor44 — can be ordered to reimburse
attorney’s fees that they can not afford to pay.
Excessive fines may also violate the Equal Protection Clause of the U.S. Constitution, by
discriminating against indigents. Williams v. Illinois, 399 U.S. 235, 242 (1970) (“Here the Illinois
statutes as applied to Williams works an invidious discrimination solely because he is unable to
pay the fine.”). See also Bearden v. Georgia, 461 U.S. 660, (1983) (Can not revoke indigent
defendant’s probation for failure to pay a fine and make restitution.).
There is abundant case law on affordability of sanctions paid by attorneys under Federal Rules
of Civil Procedure 11 and 37. For example, in a March 2009 case involving sanctions for
discovery misconduct against an attorney, Waggett, the Federal Circuit wrote:
As to the court's imposition of joint and several liability on Waggett for the $121,207.38
under Rule [of Civil Procedure] 37(c)(1)(A), we agree with Waggett that the court abused its
discretion by failing to consider that Waggett does not have the ability to pay when fashioning
the sanction against him. Thus, we reverse the imposition of liability as to him personally.
If a losing plaintiff had an improper motive in copyright litigation, then the plaintiff may be a
tortfeasor, and then the considerations beginning at page 69 below are relevant.
44
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We note that the Fifth Circuit “has consistently held that a district court, when considering the
imposition of sanctions for discovery violations ... should impose the least severe sanction
that will accomplish the desired result.” United States v. Garrett, 238 F.3d 293, 298 (5thCir.
2000) (internal quotation marks omitted). Although Rule 37(b)(2)(C) specifically authorizes
the court to order “the attorney advising [the] party” to pay “reasonable expenses, including
attorney's fees,” a number of circuits, including the Fifth, have concluded that monetary
sanctions must be tailored to a party's ability to pay. See
• Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 881 (5th Cir.1988) (en banc) (noting,
in the Rule 11 context, that the “resources of the party to be sanctioned” are “relevant” to
the sanction imposed); see also
• Martin v. Automobili Lamborghini Exclusive, Inc., 307 F.3d 1332, 1337 (11th Cir.2002)
(“We conclude that, when exercising its discretion to sanction under its inherent power, a
court must take into consideration the financial circumstances of the party being
sanctioned.”);
• Johnson v. A.W. Chesterton Co., 18 F.3d 1362, 1366 (7th Cir.1994) (“One equitable
consideration is the ability of the sanctioned attorney (or party) to pay an award of the
other party's attorney's fees.” (addressing Rule 11));
• Oliveri v. Thompson, 803 F.2d 1265 (2d Cir.1986) (“[G]iven the underlying purpose of
sanctions — to punish deviations from proper standards of conduct with a view toward
encouraging future compliance and deterring further violations — it lies well within the
district court's discretion to temper the amount to be awarded ... by a balancing
consideration of his ability to pay.”); cf.
• Arnold v. Burger King Corp., 719 F.2d 63, 68 (4th Cir.1983) (“The policy of deterring
frivolous suits is not served by forcing the misguided Title VII plaintiff into financial ruin
simply because he prosecuted a groundless case.”).
Although these courts did not specifically address sanctions in the Rule 37 context, we find
their guidance applicable here. In Waggett's case, even an award of $121,107.38 is four times
his reported net income for the 2006 fiscal year. We conclude that the district court erred in
failing to consider that Waggett lacked the ability to pay. Therefore, we find an abuse of
discretion, and reverse the award of joint and several liability as against Waggett. [footnote 9
says the Court “in no way condone his discovery misconduct.”]
ClearValue, Inc. v. Pearl River Polymers, Inc., 560 F.3d 1291, 1305-06 (Fed.Cir. 2009)
(formatting of string cite added by Standler). See also Doering v. Union County Board of Chosen
Freeholders, 857 F.2d 191, 195-196 and n.3 (3dCir. 1988).
Improper Motive for Litigation
When plaintiff has an improper motive for litigating (e.g., bad-faith complaint,
harass defendant, harm a smaller competitor by inflicting substantial legal fees for defending the
litigation, etc.), courts will often award attorney’s fees to a prevailing defendant. I searched all
federal cases nationwide in Westlaw on 28 May 2010 for the query:
((harass! harm improper inappropriate) /s (motiv! purpose)) /p
((attorney! counsel!) +1 fee) /p copyright
The following cases are significant:
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•
Cloth v. Hyman, 146 F.Supp. 185, 193 (S.D.N.Y. 1956) (“An attorney's fee is properly
awarded when the infringement action has been commenced in bad faith, as where the
evidence establishes that the plaintiff's real motive is to vex and harass the defendant or where
plaintiff's claim is so lacking in merit as to present no arguable question of law or genuine
issue of fact. [cites five cases]”). Mentioned in Fogerty v. Fantasy, 510 U.S. 517, 531, n.16
(1994).
•
NLFC, Inc. v. Devcom Mid-America, Inc., 916 F.Supp. 751, 759-760 (N.D.Ill. 1996) (“The
Court can only conclude that it was not motivated by a good faith intent to prevail, but rather, a
bad faith attempt to harm Devcom by forcing Devcom into extremely costly litigation. The
Court finds that NLFC's course of conduct exhibits bad faith motivation to harass Devcom
rather than a motivation to protect its property interests.”);
•
Yankee Candle Co., Inc. v. Bridgewater Candle Co., 140 F.Supp.2d 111, 118 (D.Mass.
2001) (“Taken as a whole, Yankee's hardball conduct in pursuing this litigation provides
evidence of an improper motivation: to drain as much profit as possible out of a far smaller
competitor. The attorneys’ fees provision in the copyright act should serve to deter litigation
conduct of this kind.”), aff'd, 259 F.3d 25 (1stCir. 2001);
In August 2004, U.S. Court of Appeals in Tennessee reversed an award of attorney’s fees to
defendants who prevailed on summary judgment:
Under [17 U.S.C. § 505], a district court may “impose attorney[s'] fees in frivolous and
objectively unreasonable lawsuits.” Murray Hill Publ'ns, Inc. v. ABC Communications, Inc.,
264 F.3d 622, 639 (6th Cir.2001). A district court's decision to award attorneys' fees should
be based on such factors as “[the] frivolousness of the claim,” the “motivation” of the
claimant, the “reasonableness” of the claim and the goal of “deterr[ing]” frivolous claims.
Coles v. Wonder, 283 F.3d 798, 804 (6thCir. 2002) [("Such fees are subject to the discretion
of the trial court and should be based upon the factors listed in the district court's order, such
as, frivolousness of the claim, motivation, reasonableness, and deterrence.")]. We review a
district court's decision to grant or deny fees for an abuse of discretion. ABC
Communications, Inc., 264 F.3d at 639.
While plaintiffs' claim ultimately proved meritless, that does not make it “objectively
unreasonable” as a matter of law or fact. See id. at 639-40 (reversing an award of attorneys'
fees under 17 U.S.C. § 505 because “at the time [the] litigation was before the district court,
the law on certain relevant aspects of [the] lawsuit was unsettled”); cf. Protective Life Ins. Co.
v. Dignity Viatical Settlement Partners, L.P., 171 F.3d 52, 58 (1st Cir.1999) (“The mere fact
that a claim ultimately proves unavailing, without more, cannot support the imposition of Rule
11 sanctions.”). At the time Fogerty and Crow filed their complaint, they knew only that
Crow delivered “This Game We Play” to Michael Sandoval and, ten months later, MGM
used a very similar song as the theme song for “The World Is Not Enough.” Nowhere does
MGM contend that filing a complaint on this basis was objectively unreasonable. See
Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116, 122 (2dCir. 2001) (“[T]he
imposition of a fee award against a copyright holder with an objectively reasonable litigation
position will generally not promote the purposes of the Copyright Act.”).
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Fogerty v. MGM Group Holdings Corp., Inc., 379 F.3d 348, 356-357 (6thCir. 2004).
See also:
• Baker v. Urban Outfitters, Inc., 431 F.Supp.2d 351, 357 (S.D.N.Y. 2006) (“Here, the
equitable factors overwhelmingly weigh in favor of an award of costs and fees because
(1) this lawsuit was motivated by improper considerations, (2) the lawsuit was prosecuted in
bad faith, (3) the factual and legal contentions advanced by the plaintiff were either frivolous
or objectively unreasonable, and (4) there is a unique need in this case for both compensation
and deterrence.”);
•
Wood v. Cendant Corp., 504 F.Supp.2d 1174, 1176 (N.D.Okla. 2007) (“... consideration of
the following nonexclusive factors: (1) frivolousness of losing party's case; (2) improper or
bad faith motivation of the losing party; ....”);
•
Randolph v. Dimension Films, 634 F.Supp.2d 779, 795 (S.D.Tex. 2009) (“The defendants
have cited no case, and this court has located none, that infers an improper motive or bad faith
simply because a plaintiff makes an objectively unreasonable infringement claim against deeppocket defendants. Some evidence of bad faith must be shown.”).
Willful Infringement
Willful copyright infringement requires either (1) the defendant knew he was infringing the
plaintiff’s copyrights or (2) the defendant acted with reckless disregard of plaintiff’s copyrights.45
Because a proper copyright notice defeats a defense of “innocent infringement”, 17 U.S.C.
§ 401(d), a defendant who copied material with a proper copyright notice may have committed
“willful infringement” of copyright. Since the early 1980s, it has been well established law in the
USA that, when a defendant willfully infringed plaintiff’s copyright, the court is especially likely to
award attorney’s fees to a prevailing plaintiff. The following cases are significant:
•
Taylor v. Meirick, 712 F.2d 1112, 1122 (7thCir. 1983) (“There is no suggestion that the
$10,000 the magistrate awarded is unreasonably high in relation to the effort expended by
[Plaintiff's] counsel and there was abundant evidence that the infringement was willful, so the
magistrate acted well within her discretion in awarding this sum to [Plaintiff]. ....
... attorney’s fees have long been awarded in cases of willful copyright infringement even
though no actual damages were awarded or even sought. See, e.g., Shapiro, Bernstein & Co.
v. Jerry Vogel Music Co., 161 F.2d 406, 410 (2dCir. 1946); Twentieth Century Music Corp.
v. Frith, 645 F.2d 6 (5thCir. 1981) (per curiam).”). Cited with approval in International
Korwin Corp. v. Kowalczyk, 855 F.2d 375, 384 (7thCir. 1988); Rulo v. Russ Berrie & Co.,
886 F.2d 931, 942 (7thCir. 1989).
In re Barboza, 545 F.3d 702, 705 (9thCir. 2008); Lipton v. Nature Co., 71 F.3d 464, 472
(2dCir. 1995).
45
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•
McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323 (9thCir. 1987) (“the defendant’s status
as innocent, rather than willful or knowing, infringer”), overruled on other grounds by
Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). McCulloch is discussed at page 14, above.
•
Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1230 (7thCir. 1991) (“We begin by
noting that a finding of willful infringement will support an award of attorney's fees. See
Roulo v. Russ Berrie & Co., 886 F.2d 931, 942 (7thCir. 1989), cert. denied, 493 U.S. 1075,
110 S.Ct. 1124, 107 L.Ed.2d 1030 (1990); Kowalczyk, 855 F.2d [375] at 384 [(7thCir.
1988)]; Taylor v. Meirick, 712 F.2d 1112, 1122 (7thCir. 1983). As we have indicated, the
record fully supports the court's finding of willfulness. Under these circumstances, the court
properly awarded attorney’s fees. .... Moreover, this case presents a particularly appropriate
occasion on which to award attorney’s fees. The district court found that [Defendant] treated
the copyright laws with disdain.”).
•
Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co., Inc., 881 F.Supp. 1021,
1024-25 (E.D.Va. 1994) (“Defendant has been involved in copyright suits for years. ....
Only substantial awards of damages as well as attorney’s fees will deter Mr. Chase from
continuing this willful and outrageous conduct. .... In short, considerations of compensation
and deterrence justify an award of attorney's fees in this case.”), aff'd, 74 F.3d 488, 492, 497498 (4thCir. 1996), cert. den., 519 U.S. 809 (1996);
•
Historical Research v. Cabral, 80 F.3d 377, 379 (9thCir. 1996) (“Although willful
infringement is an important factor favoring an award of fees, it does not, in itself, compel
such an award. See Cable/Home Communication Corp. v. Network Productions, Inc.,
902 F.2d 829, 854 (11thCir. 1990).”);
•
Kepner-Tregoe, Inc. v. Vroom, 186 F.3d 283, 289 (2dCir. 1999) (“The court's award of
attorney fees under the Copyright Act, 17 U.S.C. § 505, is also justified based on the court's
finding of willfulness and is in line with the statutory goal of deterrence.”);
•
Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116, 122 (2dCir. 2001) (“... the
imposition of a fee award against a copyright holder with an objectively reasonable litigation
position will generally not promote the purposes of the Copyright Act.”).
•
JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007) (“The strength of
[Plaintiff's] case against [Defendant] weighs heavily in favor of awarding fees, as the
copyright infringement in this case was flagrant, ....”).
This rule is still good law in the USA in May 2010, under the factor of deterrence in Lieb, as
shown by remarks in Superior Form Builders and Kepner-Tregoe.
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other misconduct
Eventually, the emerging doctrine of “copyright misuse” may be an explicit factor that
justifies reimbursement of attorney’s fees. In May 2010, only one case has clearly made this
connection. Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437 (7thCir.
2004), quoted beginning at page 42, above.
Also, see page 32 above, for Berkla v. Corel Corp., 302 F.3d 909, 923 (9thCir. 2002)
(“highly questionable business practice” by prevailing party negates fee-shifting). In this type of
case, the prevailing party sometimes wins on purely technical grounds,46 but — nevertheless —
there is a feeling that the prevailing party engaged in some kind of misconduct.
Novel or Complex Legal Issues
Since the mid-1980s, it has been well established law that novel legal issues in a copyright
case make an award of attorneys fees generally not appropriate. The following cases are
significant:
• Official Aviation Guide Co. v. American Aviation Ass'n, 162 F.2d 541, 543 (7th Cir. 1947)
(“The instant case was hard fought and prosecuted in good faith, and it presented a complex
problem in law. There was no further facts or circumstances which would indicate that the
court had abused its discretion in denying attorneys' fees. [citations to three cases omitted,
none of the three mention "novel".]”);
•
Overman v. Loesser, 205 F.2d 521, 524 (9thCir. 1953) (“The case was hard fought. There is
no indication that the appeal was pursued in bad faith. And the principal question before us
presented a complex question of law. [footnote to Official Aviation Guide Co. v. American
Aviation Associates, 7 Cir., 1947, 162 F.2d 541. See, also, discussion of similar provisions in
Title 35, Patents, U.S.C.A. § 70, now § 285, in Park-In-Theatres v. Perkins, 9 Cir., 1951,
190 F.2d 137, 142.] Accordingly we decline to award attorney fees as part of appellee's
costs.”);
•
Edward B. Marks Music Corp. v. Continental Record Co., 222 F.2d 488, 493 (2dCir. 1955)
(“... we feel that in this case the unsuccessful litigant should not thus be penalized [by
awarding attorney’s fees to the opponent]. The litigation which it instituted was not vexatious
but involved a novel question of statutory interpretation.”).
•
Norbay Music, Inc. v. King Records, Inc., 249 F.Supp. 285, 289 (S.D.N.Y. 1966) (“The
cases reveal that a fee allowance is rarely made where there are unsettled issues of law and
fact. [citing five case, none of which mention the word "unsettled"]”);
46
A win on purely technical grounds will also not justify fee-shifting, as explained at page 77.
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•
Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 915 (D.Conn. 1980) (“Some of the
considerations that might justify the denial of fees include the presence of a complex or novel
issue of law that the defendants litigate vigorously and in good faith, Official Aviation Guide
Co. v. American Aviation Ass'n, 162 F.2d 541, 543 (7th Cir. 1947); ....”). Cited with
approval in McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323 (9thCir. 1987); Van Halen
Music v. Palmer, 626 F.Supp. 1163, 1167 (W.D.Ark. 1986); Ford Motor Co. v. B & H
Supply, Inc., 646 F.Supp. 975, 992 (D.Minn. 1986); Sailor Music v. IML Corp., 867 F.Supp.
565, 570 (E.D.Mich. 1994), amongst other cases.
•
Encyclopaedia Britannica Educational Corp. v. Crooks, 542 F.Supp. 1156, 1186-87
(W.D.N.Y. 1982) (“When faced with novel, unsettled, or complex problems in copyright
cases, courts have refused to award attorneys’ fees. Eisenschiml v. Fawcett Publications,
Inc., 246 F.2d 598, 604 (7th Cir. 1957)47 ; Norbay Music, Inc. v. King Records, Inc., 249
F.Supp. 285, 289-90 (S.D.N.Y. 1966). This case has presented such novel issues, based
upon recent technical advancements as well as unsettled issues of law and fact.”);
•
Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc., 609 F.Supp. 1325, 1329 (E.D.Pa.
1985) (no fee-shifting because infringement was before registration, but — in dicta — judge
discussed novel issues of law that would preclude a fee award), aff'd on other grounds, 797
F.2d 1222 (3dCir. 1986), cert. den., 479 U.S. 1031 (1987);
•
McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323 (9thCir. 1987) (“Considerations which
justify the denial of fees may include (1) the presence of a complex or novel issue of law that
the defendant litigates vigorously and in good faith, .... [citations omitted]”), overruled on
other grounds by Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). Quoted with approval in
Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1583 (Fed.Cir. 1992).
McCulloch is discussed at page 14, above.
•
Bourne Co. v. MPL Communications, Inc., 678 F.Supp. 70, 72 (S.D.N.Y. 1988) (“Given the
novelty of the issues involved in this action, and the lack of any bad faith on the part of
defendants, the Court declines to award costs or attorney's fees to plaintiff.”).
Eisenschiml actually says the case involved “a very close question” of law, so an award of
attorney’s fees to a prevailing plaintiff was an abuse of discretion by the trial judge. Eisenschiml
mentions neither “novel”, “unsettled”, nor “complex”.
47
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•
Applied Innovations, Inc. v. Regents of the Univ. of Minn., 876 F.2d 626, 638 (8th Cir. 1989)
(“In the present case the district court decided not to award attorney's fees to plaintiffs because
the litigation involved numerous complex or novel questions which defendant had litigated
vigorously and in good faith. The district court's assessment of this case is amply supported
by the record and the issues raised on appeal and cross-appeal. We cannot say that the district
court abused its discretion in refusing to award reasonable attorney's fees to plaintiffs.”);
•
Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1583 (Fed.Cir. 1992)
(In copyright case, attorney's “fees may be denied in various situations, including: ‘(1) the
presence of a complex or novel issue of law that the defendant litigates vigorously and in good
faith, ....’ ” [quoting McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323, 3 USPQ2d 1503,
1508 (9thCir. 1987).]).
•
Bourne Co. v. Walt Disney Co., Not Reported in F.Supp., 1994 WL 263482 at *2 (S.D.N.Y.
1994) (“Among the factors that may justify the denial of fees to a prevailing plaintiff is ‘the
presence of a complex or novel issue of law that the defendants litigate vigorously and in good
faith.’ Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 915 (D.Conn. 1980). ....”),
aff'd on other grounds, 68 F.3d 621 (2dCir. 1995).
•
Maljack Productions, Inc. v. GoodTimes Home Video Corp., 81 F.3d 881, 889 (9thCir. 1996)
(“The district court’s fee order stated that [Plaintiff's] copyright claims were objectively
unreasonable, that [Plaintiff] presented no complex or novel questions of copyright law, ....”);
•
Lotus Development Corp. v. Borland Intern., Inc., 140 F.3d 70, 75 (1stCir. 1998) (“Turning
to the need to encourage meritorious defenses, a copyright defendant’s success on the merits
in a case of first impression may militate in favor of a fee award, but we are unwilling to hold
that a successful defense in an important case necessarily mandates an award of attorney’s
fees. When close infringement cases are litigated, copyright law benefits from the resulting
clarification of the doctrine's boundaries. But because novel cases require a plaintiff to sue in
the first place, the need to encourage meritorious defenses is a factor that a district court may
balance against the potentially chilling effect of imposing a large fee award on a plaintiff, who,
in a particular case, may have advanced a reasonable, albeit unsuccessful, claim.”) (See also at
page 72: “... the district court reasoned, in essence, that [the Parties] had litigated a novel and
unsettled question of copyright law ..., and thus ... an award of fees was not warranted.”);
•
Action Tapes, Inc. v. Mattson, 462 F.3d 1010, 1014 (8thCir. 2006) (“Here, [Plaintiff] raised
important and novel issues under the seldom-litigated Rental Amendments Act. The district
court did not abuse its discretion in denying an attorneys’ fee award [to prevailing
defendant].”);
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•
Brown v. Perdue, Not Reported in F.Supp.2d, 2006 WL 2679936 at *4 (S.D.N.Y. 2006)
(The Magistrate Judge wrote that: “Moreover, cases with claims involving novel or complex
issues do not warrant a court in making a finding of objective unreasonableness. See Littel v.
Twentieth Century-Fox Film Corp., No. 89 Civ. 8526, 1996 WL 18819, at *3 (S.D.N.Y. Jan.
18, 1996).”);
•
Meshwerks, Inc. v. Toyota Motor Sales U.S.A., Inc., 528 F.3d 1258, 1270, n.11 (10thCir.
2008) (“Defendants’ request for the costs and attorneys fees associated with this appeal is
denied. .... Far from being frivolous, this suit presents a novel and consequential question
focused on the copyrightability of images in a relatively new technological medium.”);
Notice that in Boz Scaggs, Judge Blumenfeld in U.S. District Court in Connecticut in
April 1980 invented the rule about novel legal issues defeating fee-shifting, although he cited a case
for the proposition that complex litigation defeated fee-shifting. Complexity is a different criterion
than novel issues of law. However, Judge Blumenfeld was correct to include novel issues of law
as a relevant criterion, because litigating novel issues of law helps clarify legal rights, thereby
promoting the purposes of the Copyright Act. Encouraging presentation of novel legal issues is
consistent with Fogerty v. Fantasy, Inc., 510 U.S. 517, 518 (1994) (“... it is peculiarly important
that the law’s boundaries be demarcated as clearly as possible.”). See also Lotus Development
Corp. v. Borland Intern., Inc., 140 F.3d 70, 75 (1stCir. 1998).
This rule about novel legal issues is consistent with the rule that willful infringement of
copyrights justifies an award of attorney’s fees to prevailing plaintiff. In cases involving novel
legal issues, copying is unlikely to be willful, because the uncertain legal issue(s) prevents
knowledge of wrongfulness.
The presence of novel legal issues may also justify a higher hourly fee — and more total
hours — by the attorneys, see the second factor in Johnson, which is quoted on page 79, below.
So it is unfortunate from the perspective of the prevailing party that such large legal fees can not be
reimbursed by the losing party.
Note that there are four factors in Lieb, which factors must be juggled and weighed by a
judge. On the other hand, the presence of novel issues of law is a consideration that will bar award
of attorney’s fees.
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Purely Technical Win
Note that a purely technical win by the prevailing party in a copyright case does not justify
fee-shifting. This rule may originate in a U.S. Supreme Court decision in March 1989:
Thus, at a minimum, to be considered a prevailing party within the meaning of [42 U.S.C.]
§ 1988, the plaintiff must be able to point to a resolution of the dispute which changes the
legal relationship between itself and the defendant. [citations deleted] Beyond this absolute
limitation, a technical victory may be so insignificant ... as to be insufficient to support
prevailing party status. .... Where the plaintiff's success on a legal claim can be characterized
as purely technical or de minimis, a district court would be justified in concluding that even
the “generous formulation” we adopt today has not been satisfied. [citations deleted]
Texas State Teachers Ass’n v. Garland Indep. School District, 489 U.S. 782, 792 (1989).
For copyright cases, see, e.g.,
• Warner Bros. v. Dae Rim Trading, 877 F.2d 1120, 1126 (2dCir. 1989) (citing Texas State);
•
Screenlife Establishment v. Tower Video, Inc., 868 F.Supp. 47, 50 (S.D.N.Y. 1994)
(Sotomayor, J.) (citing Texas State and Warner Bros.);
•
Cable/Home Communication Corp. v. Network Productions, 902 F.2d 829, 853 (11thCir.
1999) (citing Texas State);
•
Collins v. Aztar Corp., Unpublished, 2000 WL 302782 at *3 (2dCir. 2000) (citing Texas
State);
•
Berkla v. Corel, 302 F.3d 909, 924 (9thCir. 2002), which was quoted at page 32, above;
•
Milton H. Greene Archives v. Julien’s Auction House, 345 Fed.Appx. 244, 249, ¶17 (9thCir.
2009), which was quoted at page 33, above.
There are two different types of “purely technical wins”:
1. Winning on procedural grounds, instead of on the merits of the case. Ruckelshaus v. Sierra
Club, 463 U.S. 680, 688, n. 9 (1983) (“Of course, we do not mean to suggest that trivial
success on the merits, or purely procedural victories, would justify an award of fee”);
United States v. Hooker Chem. & Plastics Corp., 591 F.Supp. 966, 968 (W.D.N.Y. 1983)
(“Nor may fees be awarded for purely procedural victories.”).
2. Winning a trivial amount of damages, e.g., a plaintiff who sues for $ 17 million but is
awarded only $ 1. Farrar v. Hobby, 506 U.S. 103, 119 (1992) (O’Connor, J., concurring)
(“[T]he occurrence of a purely technical or de minimis victory is such a circumstance.
Chimerical accomplishments are simply not the kind of legal change that Congress sought to
promote in the fee statute.”).
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Reasonableness
The fee-shifting statute itself requires that any award of attorney's fees be reasonable:
... the court may also award a reasonable attorney’s fee to the prevailing party ...
17 U.S.C § 505. Reading the statute shows that reasonable is the most important criterion in
deciding the amount of fees to award to a prevailing party — because it is the only criterion
mentioned in the statute.
Most of the judicial opinions about reasonableness of attorney’s fees have been in the context
of reimbursing attorney’s fees in civil rights litigation and other litigation not involving copyrights.
Because of the large number of reported cases on this issue, I concentrated on
1. Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5thCir. 1974), a frequently cited
historic case that gives useful factors to consider in determining reasonableness of fees
(beginning at page 78, below)
2. opinions of the U.S. Supreme Court during 1980-2010 (beginning at page 82, below)
3. some opinions in the U.S. Courts of Appeals for the Second and Seventh Circuits (beginning
at pages 95 and 99 below)
It is clear that the same legal standards apply to determining a reasonable attorney fee in all kinds
of civil cases, as explained in detail below, at page 87.
There are two approaches to determining reasonable attorney’s fees: (1) a list of twelve factors
in Johnson and (2) the lodestar method. These two methods are not mutually exclusive, as
practical applications of the lodestar method often considers some of the factors in Johnson to
adjust the number of hours or to adjust the hourly rate, to obtain a reasonable attorney’s fee, as
explained below at page 92.
Johnson v. Georgia Highway Express (5thCir. 1974)
In January 1974, a U.S. Court of Appeals in Georgia issued a set of criteria to consider in
determining a reasonable attorney’s fee under the civil rights statute. The opinion was
subsequently cited in legislative history by the U.S. Congress and also cited by the U.S. Supreme
Court. As explained below, beginning at page 92, I believe these criteria remain useful to
determine a reasonable attorney’s fee.
It is for these reasons that we must remand to the District Court for reconsideration in
light of the following guidelines:
(1) The time and labor required. Although hours claimed or spent on a case should not
be the sole basis for determining a fee, Electronics Capital Corp. v. Sheperd, 439 F.2d 692
(5thCir. 1971), they are a necessary ingredient to be considered. The trial judge should weigh
the hours claimed against his own knowledge, experience, and expertise of the time required
to complete similar activities. If more than one attorney is involved, the possibility of
duplication of effort along with the proper utilization of time should be scrutinized. The time
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of two or three lawyers in a courtroom or conference when one would do, may obviously be
discounted. It is appropriate to distinguish between legal work, in the strict sense, and
investigation, clerical work, compilation of facts and statistics and other work which can often
be accomplished by non-lawyers but which a lawyer may do because he has no other help
available. Such non-legal work may command a lesser rate. Its dollar value is not enhanced
just because a lawyer does it.
[Cite as: 488 F.2d at 718]
(2) The novelty and difficulty of the questions. Cases of first impression generally
require more time and effort on the attorney's part. Although this greater expenditure of time
in research and preparation is an investment by counsel in obtaining knowledge which can be
used in similar later cases, he should not be penalized for undertaking a case which may
“make new law.” Instead, he should be appropriately compensated for accepting the
challenge.
(3) The skill requisite to perform the legal service properly. The trial judge should closely
observe the attorney's work product, his preparation, and general ability before the court. The
trial judge's expertise gained from past experience as a lawyer and his observation from the
bench of lawyers at work become highly important in this consideration.
(4) The preclusion of other employment by the attorney due to acceptance of the case.
This guideline involves the dual consideration of otherwise available business which is
foreclosed because of conflicts of interest which occur from the representation, and the fact
that once the employment is undertaken the attorney is not free to use the time spent on the
client's behalf for other purposes.
(5) The customary fee. The customary fee for similar work in the community should be
considered. It is open knowledge that various types of legal work command differing scales
of compensation. At no time, however, should the fee for strictly legal work fall below the
$20 per hour prescribed by the Criminal Justice Act, 18 U.S.C.A. § 3006A(d)(1), and
awarded to appointed counsel for criminal defendants. As long as minimum fee schedules are
in existence and are customarily followed by the lawyers in a given community,FN4 they
should be taken into consideration.
FN4. See n. 3, supra. [Which notes that the American Bar Association recommends that
‘minimum’ or ‘suggested’ fees schedules be withdrawn by state and local bar
associations.]
(6) Whether the fee is fixed or contingent. The fee quoted to the client or the percentage of
the recovery agreed to is helpful in demonstrating the attorney's fee expectations when he
accepted the case. But as pointed out in Clark v. American Marine, supra,
[t]he statute does not prescribe the payment of fees to the lawyers. It allows the award to
be made to the prevailing party. Whether or not he agreed to pay a fee and in what
amount is not decisive. Conceivably, a litigant might agree to pay his counsel a fixed
dollar fee. This might be even more than the fee eventually allowed by the court. Or he
might agree to pay his lawyer a percentage contingent fee that would be greater than the
fee the court might ultimately set. Such arrangements should not determine the court's
decision. The criterion for the court is not what the parties agreed but what is reasonable.
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320 F.Supp. [709] at 711 [(E.D.La. 1970)]. In no event, however, should the litigant be
awarded a fee greater than he is contractually bound to pay, if indeed the attorneys have
contracted as to amount.48
(7) Time limitations imposed by the client or the circumstances. Priority work that
delays the lawyer's other legal work is entitled to some premium. This factor is particularly
important when a new counsel is called in to prosecute the appeal or handle other matters at a
late stage in the proceedings.
(8) The amount involved and the results obtained. Title VII, 42 U.S.C.A. § 2000e-5(g),
permits the recovery of damages in addition to injunctive relief. Although the Court should
consider the amount of damages, or back pay awarded, that consideration should not obviate
court scrutiny of the decision's effect on the law. If the decision corrects across-the-board
discrimination affecting a large class of an employer's employees, the attorney's fee award
should reflect the relief granted.
(9) The experience, reputation, and ability of the attorneys. Most fee scales reflect an
experience differential with [Cite as: 488 F.2d at 719] the more experienced attorneys
receiving larger compensation. An attorney specializing in civil rights cases may enjoy a
higher rate for his expertise than others, providing his ability corresponds with his experience.
Longevity per se, however, should not dictate the higher fee. If a young attorney demonstrates
the skill and ability, he should not be penalized for only recently being admitted to the bar.
(10) The “undesirability” of the case. Civil rights attorneys face hardships in their
communities because of their desire to help the civil rights litigant. See NAACP v. Button, 371
U.S. 415, 443, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963); Sanders v. Russell, 401 F.2d 241
(5thCir. 1968). Oftentimes his decision to help eradicate discrimination is not pleasantly
received by the community or his contemporaries. This can have an economic impact on his
practice which can be considered by the Court.
(11) The nature and length of the professional relationship with the client. A lawyer in
private practice may vary his fee for similar work in the light of the professional relationship
of the client with his office. The Court may appropriately consider this factor in determining
the amount that would be reasonable.
(12) Awards in similar cases. The reasonableness of a fee may also be considered in the
light of awards made in similar litigation within and without the court's circuit. For such
assistance as it may be, we note in the margin a list of Title VII cases in this and other Circuits
reviewed in the consideration of this appeal.FN5
FN5. Fifth Circuit: Peters v. Missouri Pacific R.R. Co., 483 F.2d 490 (5th Cir., 1973);
Weeks v. Southern Bell Tel. & Tel., 467 F. 2d 95 (5th Cir. 1972); Rowe v. G.M. Corp.,
457 F.2d 348 (5th Cir. 1972); Long v. Georgia Kraft Co., 455 F.2d 331 (5th Cir. 1972);
Culpepper v. Reynolds Metals Co., 442 F.2d 1078 (5th Cir. 1971); Clark v. American
Marine Corp., 320 F.Supp. 709 (E.D.La. 1970), aff'd 437 F.2d 959 (5th Cir. 1971);
Drew v. Liberty Mutual Ins. Co., 480 F.2d 69 (5th Cir., 1973); Franks v. Bowman
Note by Standler: This one sentence limiting reimbursement of attorney’s fees to a maximum
specified in the contracted amount was abrogated by the U.S. Supreme Court in Blanchard v.
Bergeron, 489 U.S. 87, 92-94 (1989). See U.S. v. Caro, 579 F.3d 452, 462 (5thCir. 2009).
48
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Transp. Co., (N.D.Ga. June 29, 1972); Bing v. Roadway Express, (N.D.Ga. May 19,
1972), vacated, 485 F.2d 441 (5th Cir. 1973); Baxter v. Savannah Sugar Refining Corp.,
350 F. Supp. 139 (S.D.Ga. 1972); LeBlanc v. Southern Bell Tel. & Tel., 333 F.Supp.
602 (E.D. La. 1971); Humphrey v. Southwestern Portland Cement, 5 F.E.P. Cases 897
(W.D.Tex. 1973). First Circuit: United States v. Gray, 319 F.Supp. 871 (D.R.I. 1970).
Fourth Circuit: Lea v. Cone Mills, Inc., 467 F.2d 277 (4th Cir. 1972); Robinson v.
Lorillard Corp., 444 F.2d 791 (4th Cir. 1971). Sixth Circuit: Manning v. International
Union, 466 F.2d 812 (6th Cir. 1972). Seventh Circuit: Bowe v. Colgate-Palmolive, 416
F.2d 711 (7th Cir. 1969); Batiste v. Furnco Construction, 350 F.Supp. 10 (N.D. Ill.
1972). Eighth Circuit: Parham v. Southwestern Bell Tel. Co., 433 F.2d 421 (8th Cir.
1970); Vogel v. T.W.A., 346 F.Supp. 805 (W.D.Mo. 1971). Ninth Circuit: Schaeffer v.
San Diego Yellow Cabs, Inc., 462 F.2d 1002 (9th Cir. 1972); Malone v. N. A. Rockwell
Corp., 457 F.2d 779 (9th Cir. 1972); Rosenfield v. Southern Pacific Co. (C.D.Calif. Dec.
2, 1971). Tenth Circuit: Barela v. United Nuclear Corp., 462 F.2d 149 (10th Cir. 1972);
Evans v. Sheraton Park Hotel (D.C.D.C. Dec. 27, 1972); Brito v. Zia Co. (D.C.N.M.
1972).
These guidelines are consistent with those recommended by the American Bar
Association's Code of Professional Responsibility, Ethical Consideration 2-18, Disciplinary
Rule 2-106. They also reflect the considerations approved by us in Clark v. American Marine
Co., [437 F.2d 959 (5thCir. 1971) (per curiam), affirming 320 F.Supp. 709, 711-712
(E.D.La. 1970)].
To put these guidelines into perspective and as a caveat to their application, courts must
remember that they do not have a mandate under Section 706(k) to make the prevailing
counsel rich. Concomitantly, the Section should not be implemented in a manner to make the
private attorney general's position so lucrative as to ridicule the public attorney general. The
statute was not passed for the benefit of attorneys but to enable litigants to obtain competent
counsel worthy of a contest with the caliber of counsel available to their opposition and to
fairly place the economical burden of Title VII litigation. Adequate compensation is
necessary, [Cite as: 488 F.2d at 720] however, to enable an attorney to serve his client
effectively and to preserve the integrity and independence of the profession. The guidelines
contained herein are merely an attempt to assist in this balancing process.
....
By this discussion we do not attempt to reduce the calculation of a reasonable fee to
mathematical precision. Nor do we indicate that we should enter the discretionary area which
the law consigns to the trial judge.
Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714, 717-720 (5thCir. 1974).
Below, beginning at page 92, I argue that the twelve factors in Johnson are still valid, in the context
of determining either a reasonable number of hours, or a reasonable hourly rate.
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Lodestar Method
U.S. Supreme Court
This section of my essay cites cases on reimbursement of attorney’s fees in general —
not involving copyright litigation. I searched for the following general query:
(unreasonabl! reasonabl! excessiv!) /s (attorney! +1 fee)
for U.S. Supreme Court cases from 1980 to 9 March 2010.
Hensley v. Eckerhart (1983)
In May 1983, the U.S. Supreme Court decided the landmark case of Hensley v. Eckerhart, which
determined the meaning of reasonable attorney’s fees in civil rights cases, under 42 U.S.C.
§ 1988(b), the Civil Rights Attorney’s Fees Awards Act of 1976.
The amount of the fee, of course, must be determined on the facts of each case. On this
issue the House Report [H.R.Rep. No. 94-1558 at p. 8 (1976)] simply refers to twelve factors
set forth in [Cite as: 461 U.S. at 430] Johnson v. Georgia Highway Express, Inc., 488 F.2d
714 (CA5 1974).FN3 The Senate Report [S.Rep. No. 94-1011 at p. 6 (1976), reprinted in
1976 U.S. CODE CONG . & ADMIN . NEWS 5908, 5913] cites to Johnson as well and also refers
to three district court decisions that “correctly applied” the twelve factors.FN4 One of the
factors in Johnson, “the amount involved and the results obtained,” indicates that the level of a
plaintiff's success is relevant to the amount of fees to be awarded. The importance of this
relationship is confirmed in varying degrees by the other cases cited approvingly in the Senate
Report.
FN3. The twelve factors are: (1) the time and labor required; (2) the novelty and
difficulty of the questions; (3) the skill requisite to perform the legal service properly;
(4) the preclusion of employment by the attorney due to acceptance of the case; (5) the
customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by
the client or the circumstances; (8) the amount involved and the results obtained; (9) the
experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case;
(11) the nature and length of the professional relationship with the client; and (12) awards
in similar cases. 488 F.2d, at 717-719. These factors derive directly from the American
Bar Association Code of Professional Responsibility, Disciplinary Rule 2-106.
FN4. “It is intended that the amount of fees awarded ... be governed by the same
standards which prevail in other types of equally complex Federal litigation, such as
antitrust cases[,] and not be reduced because the rights involved may be nonpecuniary in
nature. The appropriate standards, see Johnson v. Georgia Highway Express, 488 F.2d
714 (5th Cir.1974), are correctly applied in such cases as Stanford Daily v. Zurcher,
64 F.R.D. 680 (ND Cal.1974); Davis v. County of Los Angeles, 8 E.P.D. ¶ 9444 (CD
Cal.1974); and Swann v. Charlotte-Mecklenburg Board of Education, 66 F.R.D. 483
(WDNC 1975). These cases have resulted in fees which are adequate to attract
competent counsel, but which do not produce windfalls to attorneys. In computing the
fee, counsel for a prevailing party should be paid, as is traditional with attorneys
compensated by a fee-paying client, ‘for all time reasonably expended on a matter.’
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Davis, supra; Stanford Daily, supra at 684.” S.Rep. No. 94-1011, p. 6 (1976), U.S.Code
Cong. & Admin.News 1976, pp. 5908, 5913.
Hensley v. Eckerhart, 461 U.S. 424, 429-430 (1983).
The U.S. Supreme court in Hensley cited three opinions in the U.S. District Courts, which the
U.S. Senate Report said correctly applied the factors in Johnson. The Court concluded its review
of cases:
In each of these three cases the plaintiffs obtained essentially complete relief. The
legislative history, therefore, does not provide a definitive answer as to the proper standard for
setting a fee award where the plaintiff has achieved only limited success. Consistent with the
legislative history, courts of appeals generally have recognized the relevance of the results
obtained to the amount of a fee award. They have adopted varying standards, however, for
applying this principle in cases where the plaintiff did not succeed on all claims asserted.
[footnote omitted that cites disagreements amongst circuits]
Hensley v. Eckerhart, 461 U.S. 424, 431-432 (1983).
The Court then announced the proper standard for determining a reasonable attorney’s fee.
The most useful starting point for determining the amount of a reasonable fee is
the number of hours reasonably expended on the litigation multiplied by a reasonable
hourly rate.49 This calculation provides an objective basis on which to make an initial
estimate of the value of a lawyer's services. The party seeking an award of fees should submit
evidence supporting the hours worked and rates claimed. Where the documentation of hours
is inadequate, the district court may reduce the award accordingly. The district court also
should exclude from this initial fee calculation hours that were not “reasonably expended.”
S.Rep. No. 94-1011, p. 6 (1976). Cases may be overstaffed, and the skill and experience of
lawyers vary widely. Counsel for the prevailing party should make a good faith effort to
exclude from a fee request hours that are excessive, redundant, or otherwise [Cite as: 461
U.S. at 434] unnecessary, just as a lawyer in private practice ethically is obligated to exclude
such hours from his fee submission. “In the private sector, ‘billing judgment’ is an important
component in fee setting. It is no less important here. Hours that are not properly billed to
one's client also are not properly billed to one's adversary pursuant to statutory authority.”
Copeland v. Marshall, 205 U.S.App.D.C. 390, 401, 641 F.2d 880, 891 (1980) (en banc)
(emphasis in original).
The product of reasonable hours times a reasonable rate does not end the inquiry. There
remain other considerations that may lead the district court to adjust the fee upward or
downward, including the important factor of the “results obtained.” FN9 This factor is
particularly crucial where a plaintiff is deemed “prevailing” even though he succeeded on only
some of his claims for relief. In this situation two questions must be addressed. First, did the
plaintiff fail to prevail on claims that were unrelated to the claims on which he succeeded?
Second, did the plaintiff achieve a level of success that makes the hours reasonably expended
a satisfactory basis for making a fee award?
Boldface added by Standler. The amount obtained by multiplying “hours reasonably
expended” times “a reasonable hourly rate” is known as the lodestar.
49
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FN9. The district court also may consider other factors identified in Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714, 717-719 (CA5 1974), though it should note that
many of these factors usually are subsumed within the initial calculation of hours
reasonably expended at a reasonable hourly rate. See Copeland v. Marshall, 205
U.S.App.D.C. 390, 400, 641 F.2d 880, 890 (1980) (en banc).
Hensley v. Eckerhart, 461 U.S. 424, 433-434 (1983).
If, on the other hand, a plaintiff has achieved only partial or limited success, the product of
hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be
an excessive amount. This will be true even where the plaintiff's claims were interrelated,
nonfrivolous, and raised in good faith. Congress has not authorized an award of fees
whenever it was reasonable for a plaintiff to bring a lawsuit or whenever conscientious
counsel tried the case with devotion and skill. Again, the most critical factor is the degree
of success obtained.50
Hensley v. Eckerhart, 461 U.S. 424, 436 (1983).
The Court also remarked in a footnote: “We hold that the extent of a plaintiff's success is a crucial
factor that the district courts should consider carefully in determining the amount of fees to be
awarded.” Hensley, n.14.
We hold that the extent of a plaintiff's success is a crucial factor in determining the proper
amount of an award of attorney's fees under 42 U.S.C. § 1988. Where the plaintiff has failed
to prevail on a claim that is distinct in all respects from his successful claims, the hours spent
on the unsuccessful claim should be excluded in considering the amount of a reasonable fee.
Hensley, 461 U.S. at 440.
A request for attorney's fees should not result in a second major litigation.51
Ideally, of course, litigants will settle the amount of a fee. Where settlement is not possible,
the fee applicant bears the burden of establishing entitlement to an award and documenting the
appropriate hours expended and hourly rates.
Hensley, 461 U.S. at 437.
lodestar
“Lodestar” is legal jargon for determining the total attorney’s fees by multiplying the number of
hours worked times the hourly rate. City of Riverside v. Rivera, 477 U.S. 561, 568 (1986) cites
Hensley, 461 U.S. at 433 for this method and then City of Riverside says “this figure ... is
presumed to be the reasonable fee contemplated by § 1988.” City of Riverside, 477 U.S. at 568.
50
Boldface added by Standler.
51
Boldface added by Standler.
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The word “lodestar” in the context of attorney’s fees was first used in Lindy Bros. v.
American Radiator, 487 F.2d 161, 168 (3dCir. 1973), on remand, 382 F.Supp. 999, 1003 (D.Pa.
1974), rev’d, 540 F.2d 102, 108 (3dCir. 1976) (en banc), although the method is older. The U.S.
Supreme Court first used the word “lodestar” in this context in 1981. Delta Air Lines v. August,
450 U.S. 346, 365, n.3 (1981) (citing Lindy Bros., 540 F.2d 102 (3dCir. 1976)).
Hensley is still valid law in May 2010, as explained below, beginning at page 90.
Blum v. Stenson (1984)
In 1984, the U.S. Supreme Court grappled with how to calculate the amount of an attorney's fee
award for salaried attorneys employed by nonprofit legal aid organizations, who had no billing rate
for clients. While this situation will rarely arise in copyright litigation, the Court in Blum
mentioned factors to consider that are relevant in a broader context of determining reasonable
attorney’s fees.
The statute and legislative history establish that “reasonable fees” under § 1988 are to be
calculated according to the prevailing market rates in the relevant community, regardless of
whether plaintiff is represented by private or nonprofit counsel.FN11
FN11. We recognize, of course, that determining an appropriate “market rate” for the
services of a lawyer is inherently difficult. Market prices of commodities and most
services are determined by supply and demand. In this traditional sense there is no such
thing as a prevailing market rate for the service of lawyers in a particular community.
The type of services rendered by lawyers, as well as their experience, skill and reputation,
varies extensively — even within a law firm. Accordingly, the hourly rates of lawyers in
private practice also vary widely. The fees charged often are based on the product of
hours devoted to the representation multiplied by the lawyer's customary rate. But the fee
usually is discussed with the client, may be negotiated, and it is the client who pays
whether he wins or loses. The § 1988 fee determination is made by the court in an
entirely different setting: there is no negotiation or even discussion with the prevailing
client, as the fee — found to be reasonable by the court — is paid by the losing party.
Nevertheless, as shown in the text above, the critical inquiry in determining
reasonableness is now generally recognized as the appropriate hourly rate. And the rates
charged in private representations may afford relevant comparisons. In seeking some
basis for a standard, courts properly have required prevailing attorneys to justify the
reasonableness of the requested rate or rates. To inform and assist the court in the
exercise of its discretion, the burden is on the fee applicant to produce satisfactory
evidence — in addition to the attorney's own affidavits — that the requested rates are in
line with those prevailing in the community for similar services by lawyers of reasonably
comparable skill, experience and reputation. A rate determined in this way is normally
deemed to be reasonable, and is referred to — for convenience — as the prevailing
market rate.
Blum v. Stenson, 465 U.S. 886, 895 (1984).
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lodestar presumed to be the reasonable fee
The lodestar amount is presumed to be the reasonable fee:
When, however, the applicant for a fee has carried his burden of showing that the claimed rate
and number of hours are reasonable, the resulting product is presumed to be the reasonable
fee contemplated by § 1988.
Blum v. Stenson, 465 U.S. 886, 897 (1984).
This holding in Blum was quoted by the Court in Delaware Valley I:
We emphasized, however, that the figure resulting from this calculation is more than a mere
“rough guess” or initial approximation of the final award to be made. Instead, we found that
“[w]hen ... the applicant for a fee has carried his burden of showing that the claimed rate and
number of hours are reasonable, the resulting product is presumed to be the reasonable fee” to
which counsel is entitled. [Blum], at 897, 104 S.Ct., at 1548 (emphasis added [by the Court]).
Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 564 (1986).
Then the Court increased the presumption to a “strong presumption”:
A strong presumption that the lodestar figure — the product of reasonable hours times a
reasonable rate — represents a “reasonable” fee is wholly consistent with the rationale behind
the usual fee-shifting statute, ....
Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986).
In 1989, the Court reiterated:
Even when considering the award of attorney's fees under the Clean Air Act, 42 U.S.C.
§ 7401 et seq., the Court has applied the § 1988 approach, stating: “A strong presumption that
the lodestar figure — the product of reasonable hours times a reasonable rate — represents a
‘reasonable fee’ is wholly consistent with the rationale behind the usual fee-shifting statute....”
Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565, 106
S.Ct. 3088, 3098, 92 L.Ed.2d 439 (1986).
Blanchard v. Bergeron, 489 U.S. 87, 95 (1989).
In 1992, six years after Delaware Valley I, the U.S. Supreme Court again wrote that there is a
“strong presumption” that the lodestar amount is the correct award to a prevailing party:
The “lodestar” figure has, as its name suggests, become the guiding light of our feeshifting jurisprudence. We have established a “strong presumption” that the lodestar
represents the “reasonable” fee, Delaware Valley I, supra, 478 U.S. [546], at 565, 106 S.Ct.,
at 3098, and have placed upon the fee applicant who seeks more than that the burden of
showing that “such an adjustment is necessary to the determination of a reasonable fee.”
Blum v. Stenson, 465 U.S. 886, 898, 104 S.Ct. 1541, 1548, 79 L.Ed.2d 891 (1984)
(emphasis added [by the Court]).
City of Burlington v. Dague, 505 U.S. 557, 562 (1992).
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In April 2010, the Court noted that there was still a strong presumption that the lodestar amount
was correct, but there might be exceptions.
The lodestar method was never intended to be conclusive in all circumstances. Instead, there
is a “strong presumption” that the lodestar figure is reasonable, but that presumption may be
overcome in those rare circumstances in which the lodestar does not adequately take into
account a factor that may properly be considered in determining a reasonable fee.
Perdue v. Kenny A. ex rel. Winn, 130 S.Ct. 1662, 1673 (21 April 2010).
same standards in all fee-shifting statutes
A plaintiff, named Dague, owned land adjacent to a city landfill in Burlington, Vermont.
Dague sued under the federal Solid Waste Disposal Act and Clean Water Act, was granted
summary judgment, and was awarded attorney’s fees. Because the trial court enhanced the
lodestar amount by 25% (equal to a $50,000 enhancement), the city appealed to the U.S. Supreme
Court, which reversed the enhancement. The majority opinion tersely quoted the attorney’s fees
statutes in the Solid Waste Disposal Act and Clean Water Act, which were at issue in the litigation,
and said:
This language is similar to that of many other federal fee-shifting statutes, see, e.g., 42 U.S.C.
§§ 1988, 2000e-5(k), 7604(d); our case law construing what is a “reasonable” fee applies
uniformly to all of them. Flight Attendants v. Zipes, 491 U.S. 754, 758, n. 2, 109 S.Ct. 2732,
2735, n. 2, 105 L.Ed.2d 639 (1989).
City of Burlington v. Dague, 505 U.S. 557, 562 (1992).
This terse little nugget in Dague is useful to link awards of attorney's fees in copyright cases to the
abundant jurisprudence about reasonable attorney's fees in other federal fee-shifting statutes, such
as the Civil Rights Act. Earlier, the Court in Zipes said:
The language of § 706(k) [of the Civil Rights Act of 1964] is substantially the same as
§ 204(b) of the Civil Rights Act of 1964, 42 U.S.C. § 2000a-3(b), which we interpreted in
Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263
(1968), and 42 U.S.C. § 1988, which we interpreted in Hensley v. Eckerhart, 461 U.S. 424,
103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). We have stated in the past that fee-shifting statutes'
similar language is “a strong indication” that they are to be interpreted alike. Northcross v.
Memphis Bd. of Education, 412 U.S. 427, 428, 93 S.Ct. 2201, 2202, 37 L.Ed.2d 48 (1973).
See also Hanrahan v. Hampton, 446 U.S. 754, 758, n. 4, 100 S.Ct. 1987, 1989, n. 4, 64
L.Ed.2d 670 (1980) (noting that § 1988 was patterned on § 204(b) and § 706(k)); Hensley,
supra, 461 U.S., at 433, n. 7, 103 S.Ct., at 1939, n. 7 (noting that the standards set forth in the
opinion apply to all fee-shifting statutes with “prevailing party” language).
Independent Federation of Flight Attendants v. Zipes, 491 U.S. 754, 758, n.2 (1989).
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In a civil rights case, the Court noted the same standards for fee-shifting applied in all cases of
complex Federal litigation:
It is clear that Congress “intended that the amount of fees awarded ... be governed by the
same standards which prevail in other types of equally complex Federal litigation ... and not
be reduced because the rights involved may be non-pecuniary in nature.” S.Rep. No. 94-1011,
at 6, U.S.CODE CONG . & ADMIN .NEWS 1976, p. 5913.
Blanchard v. Bergeron, 489 U.S. 87, 95 (1989).
Earlier, the U.S. Supreme Court quoted the legislative history of the Civil Rights Attorney’s Fees
Act:
It is intended that the amount of fees awarded under [42 U.S.C. § 1988] be governed by
the same standards which prevail in other types of equally complex Federal litigation, such as
antitrust cases[,] and not be reduced because the rights involved may be nonpecuniary in
nature. The appropriate standards, see Johnson v. Georgia Highway Express, 488 F.2d 714
(5thCir. 1974), are correctly applied in such cases as [citing three cases].
Blum v. Stenson, 465 U.S. 886, 893 (1984) (quoting S.Rep. Nr. 94-1011, p.6 (1976), 1976
U.S. CODE CONGRESSIONAL AND ADMINISTRATIVE NEWS, p. 5913).
See also Hensley v. Eckerhart, 461 U.S. 424, 433, n.7 (1983) (“The standards set forth in this
opinion are generally applicable in all cases in which Congress has authorized an award of fees to a
‘prevailing party.’ ”).
In the above-cited cases, the U.S. Supreme Court has clearly stated that the legal criteria for a
reasonable attorney’s fee that are the same in cases under all of the various federal statutes.
However, the U.S. Supreme Court in Fogerty held that civil rights cases could have asymmetrical
criteria for awards to prevailing defendants and prevailing plaintiffs, while copyright cases required
the same criteria for both defendants and plaintiffs.
Farrar v. Hobby (1992)
A civil rights plaintiff was awarded nominal damages of only $1 on his claim for $17 million
dollars. In December 1992, the U.S. Supreme Court decided that the plaintiff was entitled to zero
attorney fee award under 42 U.S.C. § 1988.
Although the “technical” nature of a nominal damages award or any other judgment does
not affect the prevailing party inquiry, it does bear on the propriety of fees awarded under
§ 1988. Once civil rights litigation materially alters the legal relationship between the parties,
“the degree of the plaintiff's overall success goes to the reasonableness” of a fee award under
Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Garland, supra,
489 U.S., at 793, 109 S.Ct., at 1494. Indeed, “the most critical factor” in determining the
reasonableness of a fee award “is the degree of success obtained.” Hensley, supra, 461 U.S.,
at 436, 103 S.Ct., at 1941. Accord, Marek v. Chesny, 473 U.S. 1, 11, 105 S.Ct. 3012, 3017,
87 L.Ed.2d 1 (1985). In this case, petitioners received nominal damages instead of the $17
million in compensatory damages that they sought. This litigation accomplished little beyond
giving petitioners “the moral satisfaction of knowing that a federal court concluded that [their]
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rights had been violated” in some unspecified way. Hewitt, supra, 482 U.S., at 762, 107
S.Ct., at 2676. We have already observed that if “a plaintiff has achieved only partial or
limited success, the product of hours reasonably expended on the litigation as a whole times a
reasonable hourly rate may be an excessive amount.” Hensley, supra, 461 U.S., at 436, 103
S.Ct., at 1941. Yet the District Court calculated petitioners' fee award in precisely this fashion,
without engaging in any measured exercise of discretion. “Where recovery of private
damages is the purpose of ... civil rights litigation, a district court, in fixing fees, is obligated to
give primary consideration to the amount of damages awarded as compared to the amount
sought.” Riverside v. Rivera, 477 U.S. 561, 585, 106 S.Ct. 2686, 2700, 91 L.Ed.2d 466
(1986) (Powell, J., concurring in judgment). Such a comparison promotes the [Cite as: 506
U.S. at 115] court's “central” responsibility to “make the assessment of what is a reasonable
fee under the circumstances of the case.” Blanchard v. Bergeron, 489 U.S. 87, 96, 109 S.Ct.
939, 946, 103 L.Ed.2d 67 (1989). Having considered the amount and nature of damages
awarded, the court may lawfully award low fees or no fees without reciting the 12 factors
bearing on reasonableness, see Hensley, 461 U.S., at 430, n. 3, 103 S.Ct., at 1937-1938, n. 3,
or multiplying “the number of hours reasonably expended ... by a reasonable hourly rate,” id.,
at 433, 103 S.Ct., at 1939.
In some circumstances, even a plaintiff who formally “prevails” under § 1988 should
receive no attorney's fees at all. A plaintiff who seeks compensatory damages but receives no
more than nominal damages is often such a prevailing party. As we have held, a nominal
damages award does render a plaintiff a prevailing party by allowing him to vindicate his
“absolute” right to procedural due process through enforcement of a judgment against the
defendant. Carey, 435 U.S., at 266, 98 S.Ct., at 1053. In a civil rights suit for damages,
however, the awarding of nominal damages also highlights the plaintiff's failure to prove
actual, compensable injury. Id., at 254-264, 98 S.Ct., at 1047-1052. Whatever the
constitutional basis for substantive liability, damages awarded in a § 1983 action “must
always be designed ‘to compensate injuries caused by the [constitutional] deprivation.’ ”
Memphis Community School Dist. v. Stachura, 477 U.S., at 309, 106 S.Ct., at 2544 (quoting
Carey, supra, 435 U.S., at 265, 98 S.Ct., at 1053) (emphasis and brackets in original). When a
plaintiff recovers only nominal damages because of his failure to prove an essential element of
his claim for monetary relief, see Carey, supra, at 256-257, 264, 98 S.Ct., at 1048-1049,
1052, the only reasonable fee is usually no fee at all. In an apparent failure to heed our
admonition that fee awards under § 1988 were never intended to “ ‘produce windfalls to
attorneys,’ ” Riverside v. Rivera, supra, 477 U.S., at 580, 106 S.Ct., at 2697 (plurality
opinion) (quoting S.Rep. No. 94-1011, p. 6 (1976) U.S.Code Cong. & Admin.News 1976
pp. 5908, 5913), the District Court awarded $280,000 in attorney's fees without
“consider[ing] the relationship between [Cite as: 506 U.S. at 116] the extent of success and
the amount of the fee award.” Hensley, supra, 461 U.S., at 438, 103 S.Ct., at 1941.
Farrar v. Hobby, 506 U.S. 103, 114-116 (1992).
Quoted with approval in Doe v. Chao, 540 U.S. 614, 635 (2004) (“The most critical factor in
determining the reasonableness of an attorney fee award is the degree of success obtained. For a
plaintiff who enjoys no success in prosecuting his claim, ‘the only reasonable fee’ is ‘no fee at
all.’ ” (quoting Farrar v. Hobby, 506 U.S. 103, 115, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992)
(citations omitted)).”).
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Hensley is still valid.
•
Commissioner of Internal Revenue v. Banks, 543 U.S. 426, 438 (2005) (“In the federal
system statutory fees are typically awarded by the court under the lodestar approach, Hensley
v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), and the plaintiff
usually has little control over the amount awarded.”).
Hensley is still valid law. In May 2002, the U.S. Supreme Court observed that law firms in
the USA began to use hourly billing in the 1940s, but the federal courts waited until the 1980s to
adopt the lodestar method:
The federal courts did not swiftly settle on hourly rates as the overriding criterion for
attorney's fee awards. In 1974, for example, the Fifth Circuit issued an influential opinion
holding that, in setting fees under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e-5(k) (1970 ed.), courts should consider not only the number of hours devoted to a
case but also 11 other factors. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714,
717-719 (C.A.5 1974).[footnote omitted] The lodestar method did not gain a firm foothold
until the mid-1970's, see Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator &
Standard Sanitary Corp., 487 F.2d 161 (C.A.3 1973), appeal after remand, 540 F.2d 102
(1976), and achieved dominance in the federal courts only after this Court's decisions in
Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), Blum v.
Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), and Pennsylvania v.
Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d
439 (1986).
Gisbrecht v. Barnhart, 535 U.S. 789, 801 (2002).
In April 2010, the U.S. Supreme Court reviewed the history of awarding attorney’s fees and
explained the advantages of the lodestar method:
[Cite as: 130 S.Ct. at 1671] ....
The general rule in our legal system is that each party must pay its own attorney's fees
and expenses, see Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 76 L.Ed.2d 40
(1983), but Congress enacted 42 U.S.C. § 1988 in order to ensure that federal rights are
adequately enforced. Section 1988 provides that a prevailing party in certain civil rights
actions may recover “a reasonable attorney's fee as part of the costs.” [footnote omitted]
Unfortunately, the statute does not explain what Congress meant by a “reasonable” fee, and
therefore the task of identifying an appropriate methodology for determining a “reasonable”
fee was left for the courts.
One possible method was set out in [Cite as: 130 S.Ct. at 1672] Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714, 717-719 (C.A.5 1974), which listed 12 factors that a
court should consider in determining a reasonable fee.[footnote listing factors omitted] This
method, however, “gave very little actual guidance to district courts. Setting attorney's fees by
reference to a series of sometimes subjective factors placed unlimited discretion in trial judges
and produced disparate results.” Delaware Valley I, [478 U.S. 546], at 563, 106 S.Ct. 3088.
An alternative, the lodestar approach, was pioneered by the Third Circuit in Lindy Bros.
Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 487 F.2d
161 (1973), appeal after remand, 540 F.2d 102 (1976), and “achieved dominance in the
federal courts” after our decision in Hensley. Gisbrecht v. Barnhart, 535 U.S. 789, 801, 122
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S.Ct. 1817, 152 L.Ed.2d 996 (2002). “Since that time, ‘[t]he “lodestar” figure has, as its
name suggests, become the guiding light of our fee-shifting jurisprudence.’ ” Ibid. (quoting
Dague, [505 U.S. 557], at 562, 112 S.Ct. 2638).
Although the lodestar method is not perfect, it has several important virtues. First, in
accordance with our understanding of the aim of fee-shifting statutes, the lodestar looks to
“the prevailing market rates in the relevant community.” Blum v. Stenson, 465 U.S. 886, 895,
104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). Developed after the practice of hourly billing had
become widespread, see Gisbrecht, supra, at 801, 122 S.Ct. 1817, the lodestar method
produces an award that roughly approximates the fee that the prevailing attorney would have
received if he or she had been representing a paying client who was billed by the hour in a
comparable case. Second, the lodestar method is readily administrable, see Dague, 505 U.S.,
at 566, 112 S.Ct. 2638; see also Buckhannon Board & Care Home, Inc. v. West Virginia
Dept. of Health and Human Resources, 532 U.S. 598, 609, 121 S.Ct. 1835, 149 L.Ed.2d 855
(2001); and unlike the Johnson approach, the lodestar calculation is “objective,” Hensley,
supra, at 433, 103 S.Ct. 1933, and thus cabins the discretion of trial judges, permits
meaningful judicial review, and produces reasonably predictable results.
III
Our prior decisions concerning the federal fee-shifting statutes have established six
important rules that lead to our decision in this case.
First, a “reasonable” fee is a fee that is sufficient to induce a capable attorney to undertake
the representation of a meritorious civil rights case. See Delaware Valley I, 478 U.S., at 565,
106 S.Ct. 3088 (“[I]f plaintiffs ... find it possible to engage a lawyer based on the statutory
assurance that he will be paid a ‘reasonable fee,’ the purpose behind the fee-shifting statute has
been satisfied”); Blum, supra, at 897, 104 S.Ct. 1541 (“[A] reasonable attorney's fee is one
that is adequate to attract competent counsel, but that does not produce windfalls to attorneys”
(ellipsis, brackets, and internal quotation marks [Cite as: 130 S.Ct. at 1673] omitted)).
Section 1988's aim is to enforce the covered civil rights statutes, not to provide “a form of
economic relief to improve the financial lot of attorneys.” Delaware Valley I, supra, at 565,
106 S.Ct. 3088.
Second, the lodestar method yields a fee that is presumptively sufficient to achieve this
objective. See Dague, supra, at 562, 112 S.Ct. 2638; Delaware Valley I, supra, at 565, 106
S.Ct. 3088; Blum, supra, at 897, 104 S.Ct. 1541; see also Gisbrecht, supra, at 801-802, 122
S.Ct. 1817. Indeed, we have said that the presumption is a “strong” one. Dague, supra, at
562, 112 S.Ct. 2638; Delaware Valley I, supra, at 565, 106 S.Ct. 3088.
Third, although we have never sustained an enhancement of a lodestar amount for
performance, see Brief for United States as Amicus Curiae 12, 17, we have repeatedly said
that enhancements may be awarded in “ ‘rare’ ” and “ ‘exceptional’ ” circumstances.
Delaware Valley I, supra, at 565, 106 S.Ct. 3088; Blum, supra, at 897, 104 S.Ct. 1541;
Hensley, 461 U.S., at 435, 103 S.Ct. 1933.
Fourth, we have noted that “the lodestar figure includes most, if not all, of the relevant
factors constituting a ‘reasonable’ attorney's fee,” Delaware Valley I, supra, at 566, 106 S.Ct.
3088, and have held that an enhancement may not be awarded based on a factor that is
subsumed in the lodestar calculation, see Dague, supra, at 562-563, 112 S.Ct. 2638;
Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 726-727,
107 S.Ct. 3078, 97 L.Ed.2d 585 (1987) (Delaware Valley II) (plurality opinion); Blum, 465
U.S., at 898, 104 S.Ct. 1541. We have thus held that the novelty and complexity of a case
generally may not be used as a ground for an enhancement because these factors “presumably
[are] fully reflected in the number of billable hours recorded by counsel.” Ibid. We have also
held that the quality of an attorney's performance generally should not be used to adjust the
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lodestar “[b]ecause considerations concerning the quality of a prevailing party's counsel's
representation normally are reflected in the reasonable hourly rate.” Delaware Valley I, supra,
at 566, 106 S.Ct. 3088.
Fifth, the burden of proving that an enhancement is necessary must be borne by the fee
applicant. Dague, supra, at 561, 112 S.Ct. 2638; Blum, 465 U.S., at 901-902, 104 S.Ct.
1541.
Finally, a fee applicant seeking an enhancement must produce “specific evidence” that
supports the award. Id., at 899, 901, 104 S.Ct. 1541 (An enhancement must be based on
“evidence that enhancement was necessary to provide fair and reasonable compensation”).
This requirement is essential if the lodestar method is to realize one of its chief virtues, i.e.,
providing a calculation that is objective and capable of being reviewed on appeal.
Perdue v. Kenny A. ex rel. Winn, 130 S.Ct. 1662, 1671-73 (21 April 2010).
Is Johnson still valid?
There is some uncertainty whether the 12 factors in Johnson are still good law after the
lodestar method was approved by the U.S. Supreme Court in Hensley and progeny. Westlaw says
that Johnson was abrogated by Blanchard v. Bergeron, 489 U.S. 87 (1989), but my reading of
Blanchard v. Bergeron does not confirm the abrogation of the twelve factors, instead Blanchard
only abrogated one sentence in the sixth factor in Johnson that limited fees by a contingent-fee
agreement between the attorney and his client. The U.S. Court of Appeals for the Second Circuit
more accurately says that Blanchard abrogated Johnson “on other grounds”.52 In one place,
Blanchard explicitly says the factors in Johnson “may be relevant”:
... in Hensley and in subsequent cases, we have adopted the lodestar approach as the
centerpiece of attorney's fee awards. The Johnson factors may be relevant in adjusting the
lodestar amount, but no one factor is a substitute for multiplying reasonable billing rates by a
reasonable estimation of the number of hours expended on the litigation.
Blanchard v. Bergeron, 489 U.S. 87, 94 (1989). Furthermore, Justice Scalia’s separate opinion
makes clear he wants to abolish the factors in Johnson, so his opinion clarifies that the majority
wishes to continue using the factors in Johnson. Blanchard, 489 U.S. at 99 (Scalia, J., concurring
in part). I think there are two reasons to continue using appropriate factors from Johnson:
(1) the concept of “reasonable” is otherwise undefined in Hensley and progeny, and
(2) the U.S. Courts of Appeals continue to cite and apply the factors in Johnson.
These two reasons are discussed below.
McDaniel v. County of Schenectady, 595 F.3d 411, 415, 419, n.4 (2dCir. 2010); Arbor Hill
Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 186-187 (2dCir. 2008);
Porzig v. Dresdner, Kleinwort, Benson, North America LLC, 497 F.3d 133, 141-142 (2dCir. 2007).
See also cases in Virginia and Florida: Robinson v. Equifax Information Services, LLC, 560 F.3d 235,
244 (4thCir. 2009); Waters v. Intern. Precious Metals Corp., 190 F.3d 1291, 1294 (11thCir. 1999).
52
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The U.S. Supreme Court in Hensley established what was later known as the lodestar:
The most useful starting point for determining the amount of a reasonable fee is the
number of hours reasonably expended on the litigation multiplied by a reasonable hourly
rate. [emphasis added]
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). However, the criteria or factors in Johnson are
still needed to determine what reasonable means in the contexts of the reasonable number of
hours of work and the reasonable hourly rate. In many cases, the fact that a party was willing to
pay the hourly rate charged by that party’s attorney is evidence of the reasonableness of that
hourly rate.53
The U.S. Courts of Appeals continue to cite and apply Johnson, see, e.g.:
• Lohman v. Duryea Borough, 574 F.3d 163, 165 (3dCir. 2009) (“The District Court engaged
in an extensive consideration of the lodestar, and a review of the twelve factors set forth in
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), and referenced by
the Supreme Court in Hensley v. Eckerhart, 461 U.S. 424, 434 n. 9, 103 S.Ct. 1933, 76
L.Ed.2d 40 (1983).” The Court of Appeals affirmed the District Court.).
•
Moreno v. City of Sacramento, 534 F.3d 1106, 1114 (9thCir. 2008) (“The hourly rate for
successful civil rights attorneys is to be calculated by considering certain factors, including the
novelty and difficulty of the issues, the skill required to try the case, whether or not the fee is
contingent, the experience held by counsel and fee awards in similar cases. See Hensley, 461
U.S. at 430 n. 3, 103 S.Ct. 1933 (citing Johnson v. Georgia Highway Express, Inc., 488 F.2d
714 (5th Cir.1974)).”).
•
Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 188
(2dCir. 2008) “The Supreme Court adopted the lodestar method in principle, ..., without,
however, fully abandoning the Johnson method”). Quoted at page 96, below.
•
Gonter v. Hunt Valve Co., Inc., 510 F.3d 610, 621 (6thCir. 2007) (“The Fifth Circuit, in an
approach the Supreme Court has cited with approval, see, e.g., Hensley, 461 U.S. at 430 n. 3,
103 S.Ct. 1933, enunciated twelve factors that a court may consider in determining whether a
reasonable fee ought to include an augmentation. See Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714, 717-19 (5th Cir.1974).”).
•
Porzig v. Dresdner, Kleinwort, Benson, North America LLC, 497 F.3d 133, 142 (2dCir.
2007) (“It is true that a reviewing authority may consider the contingency fee paid in
determining a reasonable attorney's fee, Johnson v. Ga. Highway Express, Inc., 488 F.2d 714,
718 (5th Cir.1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 9293, 96, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989);.... ).
See, e.g., Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 438 (7thCir.
2004) (“The best evidence of the value of the lawyer's services is what the client agreed to pay him.”);
Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 184 (2dCir.
2008) (“Bearing these background principles in mind, the district court should, in determining what a
reasonable, paying client would be willing to pay, consider factors including, ....”).
53
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•
Jordan v. City of Cleveland, 464 F.3d 584, 604 (6thCir. 2006) (“We have held (Barnes, 401
F.3d [729] at 745-46 [(6thCir. 2005)]) that in evaluating such a request a district court may
consider the 12-factor test announced in Johnson v. Georgia Highway Express, Inc., 488 F.2d
714, 717-19 (5th Cir.1974): [12 factors omitted].”).
•
Barnes v. City of Cincinnati, 401 F.3d 729, 745 (6thCir. 2005) (“The key issue is whether an
adjustment is necessary to the determination of a reasonable fee. Id. The Fifth Circuit, in
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974), enunciated
twelve factors that trial courts may consider in calculating reasonable attorney fee awards. The
Supreme Court has determined that “Johnson's ‘list of 12’ ... provides a useful catalog of the
many factors to be considered in assessing the reasonableness of an award of attorney's
fees....” Blanchard v. Bergeron, 489 U.S. 87, 93, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989).”).
Seventh Circuit:
•
Strange v. Monogram Credit Card Bank of Georgia, 129 F.3d 943, 945 (7thCir. 1997) (“See
also Blanchard v. Bergeron, 489 U.S. 87, 94, 109 S.Ct. 939, 944-45, 103 L.Ed.2d 67 (1989).
(This figure would normally reflect the twelve factors to which the Court referred in the
Hensley opinion, id. at 430 n. 3, 103 S.Ct. at 1938 n. 3, which originated in Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974).)”).
•
People Who Care v. Rockford Bd. of Education, 90 F.3d 1307, 1310-11 (7thCir. 1996)
(“Once the court reaches an amount using the lodestar determination, it may then adjust that
award in light of factors adopted by Congress in enacting Section 1988, known as the Hensley
factors, [footnote quoting factors omitted] although most of those factors are usually
subsumed within the initial lodestar calculation. Hensley, 461 U.S. at 434 n. 9, 103 S.Ct. at
1940 n. 9.”).
Therefore, I think the U.S. Supreme Court was wrong in Delaware Valley54 and Purdue55 to
declare that the 12 factors in Johnson were replaced by the lodestar method.
54 Pennsylvania v. Delaware Valley Citizens Council for Clean Air, 478 U.S. 546, 563 (1986)
(“[Johnson's] major fault was that it gave very little actual guidance to district courts. Setting
attorney's fees by reference to a series of sometimes subjective factors placed unlimited discretion in
trial judges and produced disparate results. [¶] For this reason, the Third Circuit developed another
method of calculating “reasonable” attorney's fees. This method, known as the ‘lodestar’ approach,
....”).
55
130 S.Ct. at 1672 (Lodestar is an “alternative” to factors in Johnson.).
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An alternative way to look at this issue of the continuing validity of Johnson is to recognize
that the twelve factors in Johnson were copied from the eight factors56 in the American Bar
Association’s Disciplinary Rule 2-106 (enacted 1969). Every state bar has rules of professional
responsibility that are promulgated by the state’s supreme court. These rules are now generally
based on the American Bar Association’s Model Rules of Professional Conduct. Rule 1.5(a)57
contains a list of eight factors to consider in determining a reasonable attorney’s fee. Instead of
using Johnson, one could use the state’s Rule of Professional Conduct that specifies a reasonable
attorney’s fee.
Second Circuit
I have not taken the time to do a detailed review of law in the Second Circuit, but I have found
the following recent cases.
In August 2007, the U.S. Court of Appeals in New York explicitly recognized the lack of
precision in the Supreme Court's jurisprudence about the lodestar method:
We note that this Court recently opined that the “meaning of the term ‘lodestar’ has
shifted over time, and its value as a metaphor has deteriorated to the point of unhelpfulness.”
Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 493 F.3d 110, 118
& n. 4 (2d. Cir.2007). While not requiring subsequent Panels to abandon the entrenched
term, Arbor Hill persuasively reasons that because the Supreme Court has not resolved the
relationship between the “lodestar” method and the Johnson method, see Johnson v. Ga.
Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974), abrogated on other grounds by
Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989), the
term lodestar is indeed a misnomer. Arbor Hill, 493 F.3d 110, 116, 117. We generally agree
and employ the term here only as a point of orientation.
Porzig v. Dresdner, Kleinwort, Benson, North America LLC, 497 F.3d 133, 141, n.5 (2dCir.
2007). See also McDaniel v. County of Schenectady, 595 F.3d 411, 414-415 (2dCir. 2010).
56 The discrepancy between twelve and eight factors is explained in that the first factor in
DR 2-106 is split into three factors in Johnson. Also factors 10 and 12 in Johnson were taken from
case law, not from DR 2-106.
This Rule says: “A lawyer’s fee shall be reasonable. The factors to be considered in
determining the reasonableness of a fee include the following [eight factors omitted here] ....”
57
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Arbor Hill (2008)
In April 2008, the U.S. Court of Appeals in New York — in the last of four appellate decisions in
Arbor Hill — reviewed the history of the lodestar method and the 12 factors in Johnson:
Thus, the lodestar method involved two steps: (1) the lodestar calculation; and (2) adjustment
of the lodestar based on case-specific considerations.
The second method, developed by the Fifth Circuit, was for district courts to consider
twelve specified factors to establish a reasonable fee. See Johnson v. Ga. Highway Express,
Inc., 488 F.2d 714 (5th Cir.1974), [footnote listing factors omitted] abrogated on other
grounds by [Cite as: 522 F.3d at 187] Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96, 109
S.Ct. 939, 103 L.Ed.2d 67 (1989) (declining to limit fee award to amount stipulated in
attorney-client agreement). The Johnson method differed from the lodestar method in that it
contemplated a one-step inquiry.
These two circuits had sought to channel the district court's discretion in different ways.
The lodestar method was consistent with the law firm practice of accounting for each billable
hour. See Lindy, 487 F.2d at 167 (“[T]he first inquiry of the court should be into the hours
spent by the attorneys.....”); see also Gisbrecht v. Barnhart, 535 U.S. 789, 800-01, 122 S.Ct.
1817, 152 L.Ed.2d 996 (2002) (“As it became standard accounting practice to record hours
spent on a client's matter, attorneys increasingly realized that billing by hours devoted to a case
was administratively convenient.....”). When the lodestar did not accurately reflect the market,
the district court retained authority to adjust the lodestar to ensure that the fee ultimately
awarded was reasonable. By contrast, under the Johnson method, the “hours claimed or spent
on a case” were not “the sole basis for determining a fee.” Johnson, 488 F.2d at 717. Rather
than depending on market forces, the Johnson method relied on the district court's experience
and judgment. See id. at 718 (“[T]he trial judge's expertise gained from past experience as a
lawyer and his observation from the bench of lawyers at work become highly important”); id.
at 720 (discussing the necessary “balancing process”). Compare id. (“By this discussion we
do not attempt to reduce the calculation of a reasonable fee to mathematical precision.”), with
Lindy, 487 F.2d at 167.
In theory, therefore, a district court that adopted the lodestar method was expected to
consider fewer variables than a district court utilizing the Johnson method. In practice,
however, both considered substantially the same set of variables — just at a different point in
the fee-calculation process. A district court using the lodestar method would set the lodestar
and then consider whether, in light of variables such as the difficulty of the case, it should
adjust the lodestar before settling on the reasonable fee it was ultimately inclined to award.
See, e.g., Silberman v. Bogle, 683 F.2d 62, 64 (3d Cir.1982); Baughman v. Wilson Freight
Forwarding Co., 583 F.2d 1208, 1217-18 (3d Cir.1978) (permitting the district court to
multiply the lodestar by a “contingency factor” and accepting, in theory, that obtaining an
exceptional result might justify a further upward departure from the lodestar). By contrast, a
district court employing the Johnson method would consider factors, such as the difficulty of
the case, earlier in the fee-calculation process by weighing them in setting its tentative
reasonable fee, from which there would seldom be a need to depart. See, e.g., In re First
Colonial Corp. of Am., 544 F.2d 1291, 1299-1300 (5th Cir.1977) (outlining a process
whereby first, the attorney seeking fees would document the hours devoted to the case;
second, the district court would consider the Johnson factors and set a reasonable hourly rate;
and third, the district court would explain how it balanced the Johnson factors to arrive at the
reasonable hourly rate).
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[Cite as: 522 F.3d at 188]
The Supreme Court adopted the lodestar method in principle, see Hensley, 461
U.S. at 433, 103 S.Ct. 1933; Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d
891 (1984), without, however, fully abandoning the Johnson method.58 Rather than
using the attorney's own billing rate to calculate the lodestar and then examining the lodestar in
light of case-specific variables to ensure that it was in fact a reasonable fee, as the Third Circuit
had suggested, the Supreme Court instructed district courts to use a reasonable hourly ratewhich it directed that district courts set in light of the Johnson factors — in calculating what it
continued to refer to as the lodestar. See Hensley, 461 U.S. at 434 n. 9, 103 S.Ct. 1933 (“The
district court also may consider other factors identified in [Johnson] though it should note that
many of these factors usually are subsumed within the initial calculation of hours reasonably
expended at a reasonable hourly rate.”) (citation omitted) (emphasis added); Blum, 465 U.S.
at 898-900, 104 S.Ct. 1541. The Supreme Court collapsed what had once been a two-step
inquiry into a single-step inquiry; it shifted district courts' focus from the reasonableness of
the lodestar to the reasonableness of the hourly rate used in calculating the lodestar, which in
turn became the de facto reasonable fee.
But the Supreme Court's emphasis on the Third Circuit's economic model, see, e.g.,
Missouri v. Jenkins, 491 U.S. 274, 283, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989) (“Our
cases have repeatedly stressed that attorney's fees....are to be based on market rates for the
services rendered.”), and its simultaneous invocation of the equitable Johnson factors at an
early stage of the fee-calculation process, proved to be in tension, see Blum, 465 U.S. at 895
n. 11, 104 S.Ct. 1541 (“We recognize, of course, that determining an appropriate ‘market
rate’ for the services of a lawyer is inherently difficult....[since m]arket prices ... are
determined by supply and demand.”). While the Third Circuit had expected district courts to
correct for market dysfunction, the Supreme Court now asked district court judges to
hypothesize that market on the basis of their experience as lawyers within their districts and on
the basis of affidavits provided by the parties. Generally speaking, the rates an attorney
routinely charges are those that the market will bear; yet the Supreme Court required that the
district courts conjure a different, “reasonable” hourly rate.
After Hensley and Blum, circuit courts struggled with the nettlesome interplay between
the lodestar method and the Johnson method. Compare Rutherford v. Harris County, Tex.,
197 F.3d 173, 192 (5th Cir.1999) (“To decide an appropriate attorney's fee award, the district
court was first required to calculate a lodestar fee depending on the circumstances of the case
and the Johnson factors. The court was next obligated to consider whether the lodestar amount
should be adjusted upward or downward, depending on the.... Johnson factors.”) (emphasis
added), with Murray v. Weinberger, 741 F.2d 1423, 1430 (D.C.Cir.1984)(“[T]he reasonable
hourly rate which is incorporated into the lodestar figure generally reflects the reputation and
ability of the attorney, the attorney's experience, and the level of skill required for the particular
case.”), and Bebchick v. Wash. Area Metro. Transit Comm'n, 805 F.2d 396, 404
(D.C.Cir.1986) (“Of course, ‘the actual rate that applicant's counsel can command on the
market is itself highly relevant proof of the prevailing community rate.” ’).
58
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And the Supreme Court has not yet fully resolved the relationship between the two
methods.59 In cases decided after Hensley and Blum, it has both (1) suggested that district
courts should use the [Cite as: 522 F.3d at 189] Johnson factors to adjust the lodestar, see,
e.g., Blanchard, 489 U.S. at 94, 109 S.Ct. 939 (stating that the district court should arrive at
an initial estimate and then “adjust this lodestar calculation by other factors”); see also id.
(“The Johnson factors may be relevant in adjusting the lodestar amount.....”); Pierce v.
Underwood, 487 U.S. 552, 582-83, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (Brennan, J.,
concurring) (suggesting that factors might exist “that would justify an enhancement of the
lodestar”), and (2) reiterated its holding in Hensley and Blum that “many of the Johnson
factors ‘are subsumed within the initial calculation.’ ” Penn. v. Del. Valley Citizens' Council
for Clean Air, 478 U.S. 546, 564, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986).
Our court has done little to resolve this confusion. Compare Kassim v. City of
Schenectady, 415 F.3d 246, 255-56 (2d Cir.2005) (affirming the district court's authority to
“reduce the fee awarded to a prevailing plaintiff below the lodestar by reason of the plaintiff's
‘partial or limited success' ”) (emphasis added), with Luciano v. Olsten Corp., 109 F.3d 111,
116 (2d Cir.1997) (“The product of the number of reasonable hours times a reasonable hourly
rate, however, does not end the inquiry. There remain other considerations, based on the facts
of the particular case, that may lead the district court to ultimately make an adjustment to the
hourly structure.”) (internal citations omitted), and McDonald v. Pension Plan of the NYSAILA Pension Trust Fund, 450 F.3d 91, 97 (2d Cir.2006) (lodestar calculated on the basis of
“prevailing rate [specifically] for ERISA practitioners in this Circuit”) (emphasis added), and
Chambless v. Masters, Mates & Pilots Pension Plan, 885 F.2d 1053, 1058 (2d Cir.1989)
(suggesting, in determining the lodestar, that “smaller firms may be subject to their own
prevailing market rate”).
The net result of the fee-setting jurisprudence here and in the Supreme Court is that the
district courts must engage in an equitable inquiry of varying methodology while making a
pretense of mathematical precision. See Report of the Third Circuit Task Force, Court
Awarded Attorney Fees, 108 F.R.D. 237, 247 (1985) (“The Lindy process creates a sense of
mathematical precision that is unwarranted.....”). The “lodestar” is no longer a lodestar in the
true sense of the word — “a star that leads,” WEBSTER ’S THIRD INTERNATIONAL DICTIONARY
1329 (1981). Nor do courts use it in the way the term was first used by the Third Circuit —
as a base amount that is susceptible of ready adjustment; rather, circuit court deference to the
district court's estimate of a “reasonable” hourly rate is a “lodestar” only in the sense that it is
a guiding jurisprudential principle, see Dague, 505 U.S. [557] at 562, 112 S.Ct. 2638 (“The
‘lodestar’ figure has, as its name suggests, become the guiding light of our fee-shifting
jurisprudence.”). What the district courts in this circuit produce is in effect not a lodestar as
originally conceived, but rather a “presumptively reasonable fee.” See id. (holding that the fee
applicant bears the “burden of showing that ‘... an adjustment is necessary to the
determination of a reasonable fee’ ”). The focus of the district courts is no longer on
calculating a reasonable fee, but rather on setting a reasonable hourly rate, taking account of all
case-specific variables.
The district court's opinion, including the report and recommendation of Magistrate Judge
David R. Homer, with which the district court agreed after de novo review, reflects the general
confusion surrounding the lodestar calculation. In places, the district court appears to envision
a two-step lodestar calculation process; yet elsewhere it seems to contemplate undertaking the
calculation in one step. Likewise, at times, the district court [Cite as: 522 F.3d at 190]
59
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emphasizes its role in approximating the workings of the market, but it also suggests some
difference between “rates....paid by private retained clients....[and rates] ordered by courts.”
The meaning of the term “lodestar” has shifted over time, and its value as a metaphor has
deteriorated to the point of unhelpfulness. This opinion abandons its use.FN4 We think the
better course — and the one most consistent with attorney's fees jurisprudence — is for the
district court, in exercising its considerable discretion, to bear in mind all of the case-specific
variables that we and other courts have identified as relevant to the reasonableness of
attorney's fees in setting a reasonable hourly rate. The reasonable hourly rate is the rate a
paying client would be willing to pay. In determining what rate a paying client would be
willing to pay, the district court should consider, among others, the Johnson factors; it should
also bear in mind that a reasonable, paying client wishes to spend the minimum necessary to
litigate the case effectively. The district court should also consider that such an individual
might be able to negotiate with his or her attorneys, using their desire to obtain the reputational
benefits that might accrue from being associated with the case. The district court should then
use that reasonable hourly rate to calculate what can properly be termed the “presumptively
reasonable fee.”
FN4. While we do not purport to require future panels of this court to abandon the term
— it is too well entrenched — this panel believes that it is a term whose time has come.
Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 186-190
(2dCir. 2008).
Seventh Circuit
On 8 May 2010, I searched Seventh Circuit cases in Westlaw for the query:
(unreasonabl! reasonabl! excessiv!) /s (attorney! +1 fee) /p copyright
I searched back to 1993, to cover all appellate cases since Fogerty. This search returned 29 cases,
of which only the following one case was useful in explaining reasonable attorney’s fees in
copyright litigation.
•
Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824-825 (7thCir. 2005) (“While we
do not pass judgment on what the award should be, § 505 demands that it be ‘reasonable.’
And the amount Robbins seeks, over $220,000, seems quite excessive. This was not a high
stakes case, as Woodhaven claimed only $55,000 in damages. Indeed, Robbins' fees nearly
surpassed the value of the Hotzes' home.”).
See also the section beginning at page 34, above, where several Seventh Circuit opinions in
copyright cases reduced the amount of attorney’s fees awarded to a prevailing party. For Seventh
Circuit noncopyright cases about reasonable attorney’s fees, see the following pages.
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five-factor test
There is a commonly used five-factor test for attorney-fee shifting in Employee Retirement
Income Security Act (ERISA) cases, which can be traced back to Eaves v. Penn, 587 F.2d 453,
465 (10thCir. 1978). In a case arising from ERISA, the Seventh Circuit wrote in November 1989:
Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820 (7thCir. 1984), examined the
development of a five-factor test for evaluating requests for attorney's fees and costs under
Section 1132(g)(1) of ERISA,[FN9] and concluded that the five-factor test “is oriented
toward the case where the plaintiff rather than the defendant prevails and seeks an award of
attorney's fees.” Id. at 829. As a result Bittner proposed an alternative test under which fees
should be awarded to the prevailing party “unless the loser’s position, while rejected by the
court, had a solid basis — more than merely not frivolous, but less than meritorious.” Id. at
830.[footnote omitted]
FN9 The five factors are: “(1) the degree of the offending parties' culpability or bad
faith; (2) the degree of the ability of the offending parties to satisfy personally an award of
attorneys’ fees; (3) whether or not an award of attorneys' fees against the offending
parties would deter other persons acting under similar circumstances; (4) the amount of
benefit conferred on members of the pension plan as a whole; and (5) the relative merits
of the parties' positions.” Janowski v. International Brotherhood of Teamsters, 673 F.2d
931 [, 940] (7thCir. 1982), vacated on other grounds, 463 U.S. 1222, 103 S.Ct. 3565, 77
L.Ed.2d 1406 (1983). See also Chicago Painters and Decorators Pension Fund v. Karr
Bros., Inc., 755 F.2d 1285 (7thCir. 1985); Leigh v. Engle, 727 F.2d 113 (7thCir. 1984);
Marquardt v. North American Car Corp., 652 F.2d 715 (7thCir. 1981); Hummell v.
S.E. Rykoff & Co., 634 F.2d 446 (9thCir. 1980).
Nichol v. Pullman Standard, Inc., 889 F.2d 115, 121 (7thCir. 1989).
These five factors were quoted with approval in the following Seventh Circuit cases (and this is
only a partial list of Seventh Circuit cases that quote the five-factor test):
• Marquardt v. North American Car Corp., 652 F.2d 715, 717 (7thCir. 1981);
• Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 828 (7thCir. 1984);
• Meredith v. Navistar Int'l Transp. Corp., 935 F.2d 124, 128 (7thCir. 1991);
• Production and Maintenance Employees v. Roadmaster, 954 F.2d 1397, 1404 (7thCir.
1992);
• Hooper v. Demco, Inc., 37 F.3d 287, 292 (7thCir. 1994);
• Brewer v. Protexall, Inc, 50 F.3d 453, 458 (7thCir. 1995);
• Harris Trust & Savings Bank v. Provident Life and Accident Insurance Co., 57 F.3d 608,
617, n.5 (7thCir. 1995);
• Quinn v. Blue Cross & Blue Shield Ass'n, 161 F.3d 472, 478 (7thCir. 1998);
• Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 592-593 (7thCir. 2000);
• Central States, Southeast and Southwest Areas Pension Fund v. Hunt Truck Lines, Inc.,
272 F.3d 1000, 1004 (7thCir. 2001);
• Fritcher v. Health Care Service Corp., 301 F.3d 811, 819 (7thCir. 2002);
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•
•
•
•
•
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Herman v. Central States, Southeast and Southwest Areas Pension Fund, 423 F.3d 684, 696
(7thCir. 2005);
Sullivan v. William A. Randolph, Inc., 504 F.3d 665, 671 (7thCir. 2007);
Jackman Financial Corp. v. Humana Insurance Co., 641 F.3d 860, 866 (7thCir. 2011);
Pakovich v. Verizon LTD Plan, --- F.3d ----, at n.2 (7thCir. 2011);
Kolbe & Kolbe Health & Welfare Benefit Plan v. Medical College of Wisconsin, Inc., --- F.3d
----, (7thCir. 2011).
The five factors in Nichol are generally consistent with factors in Lieb, McCulloch, and other
sources of equitable considerations in attorney fee-shifting:
1. The first factor in Nichol, “culpability or bad faith”, is included in the Lieb factors on
motivation and unreasonableness, and the McCulloch factors that mention bad faith or willful
infringement.
2.
The second factor in Nichol, ability to reimburse prevailing party’s attorney’s fees, is
discussed above, beginning at page 61.
3.
The third factor in Nichol, deterrence, is equivalent to the factor in Lieb: “considerations of ...
deterrence”.
4
The fourth factor in Nichol has no corresponding element in Lieb, because Nichol is about
pension plans and Lieb is about copyright infringement. However, litigation on a novel point
of law helps clarify an important point of copyright law, and thereby benefits nonparties to the
litigation, see page 73, above.
5.
The fifth factor in Nichol, “relative merits”, is equivalent to “strength of the prevailing party’s
case” in Assessment Technologies in the Seventh Circuit.
Moriarty (2005)
In November 2005, the Seventh Circuit wrote in a case involving the Employee Retirement
Income Security Act (ERISA):
In [Moriarty v. Svec, 233 F.3d 955 (7th Cir.2001)] Moriarty II, this Court outlined the
factors to be considered in determining a reasonable amount of attorneys' fees. 233 F.3d at
965-68. Although many issues that contribute to attorneys' fees are left to its sound
discretion, the district court must demonstrate that it has considered the proportionality of
attorneys' fees to the total damage award, as well as the existence of substantial settlement
offers. Id. at 968. In addition, the district court must provide an explanation of the hourly rate
used, which is sufficient for this court to determine whether the district court has acted within
its discretion. Id. at 965.
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1. Proportionality
The district court did not address the proportionality of attorneys' fees. Given the
extended litigation in this case, attorneys' fees may be disproportionate to the damages
awarded. This Court previously offered an analysis of the importance of proportionality in an
award of attorneys' fees. See Moriarty II, 233 F.3d at 967-68. Furthermore, this Court
specifically instructed the district court to analyze proportionality in this case. As this Court
stated in Moriarty II:
[P]roportionality concerns are a factor in determining what a reasonable attorney's fee
is.... [T]he district court's fee order should evidence increased reflection before awarding
attorney's fees that [Cite as: 429 F.3d at 718] are large multiples of the damages
recovered or multiples of the damages claimed.... [W]e remand for such evaluation.
On remand ... the district court should consider ... proportionality factors in exercising its
discretion in fashioning a reasonable attorney's fee.
Id. at 968.
This Court takes no position as to whether the attorneys' fees were proportional to the
amount of the award. We must require, however, that the district court analyze this issue.
Because there has been no discussion of proportionality, we must again remand this issue to
the district court.
2. Hourly Rate
The district court's rulings regarding the proper hourly rate for Moriarty's counsel are
internally inconsistent. On remand, the district court's only discussion of the proper rate for
attorneys' fees consists of the following two sentences: “Defendant contends that plaintiff
inappropriately requests attorney's fees at the rate of $225.00 per hour rather than $165.00 per
hour. This argument is barred by the law of the case.” Order of November 19, 2002.
Although the meaning of this statement is somewhat vague, it appears “this” refers to the
subject of the previous sentence, i.e., the defendant's contention. Therefore, a plain reading of
the district court's order is that the law of the case bars Svec from arguing that Moriarty cannot
request a $225.00 hourly rate, thereby sanctioning a rate of $225.00 per hour for Moriarty's
counsel.
Although the district court appeared to indicate that the law of the case mandated an
hourly rate of $225 and the court could not consider a rate of $165, the opposite is true.
During oral argument, this Court attempted to resolve the ambiguity in the district court's
order. Neither party, however, could explain what “law of the case” the district court's Order
of November 19, 2002, referred to.
Previous rulings as to the proper hourly rate are no more illuminating. Neither party cited
what appears to be the first statement in the record concerning this subject: a March 24, 1998
finding by the district court that rates of $225 per hour for partners and $200 per hour for
associates are reasonable. This issue was next discussed on October 29, 1999, when the
district court found $165 per hour to be the market rate for the legal services provided to
Moriarty. This Court approved of that finding in Moriarty II, stating that “Given the evidence
before it, the district court did not abuse its discretion in deciding that $165 is the hourly rate
for Jacob, Burns work.” 233 F.3d at 965.
The issue of the hourly rate for attorneys' fees thus appeared to be settled. If the district
court had cited Moriarty II or its own previous rulings to find an hourly rate of $165, the law
of the case would have barred any attempt by Moriarty to inflate the hourly rate.
Svec alleges that despite its earlier order, the district court awarded attorneys' fees at rates
of $225 and $200 per hour. As this Court stated in Moriarty II, “The lawyer's regular rate is
strongly presumed to be the market rate for his or her services.” Id. at 965 (citing Central
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States Pension Fund v. Central Cartage Co., 76 F.3d 114, 116-17 (7th Cir.1996); Gusman
v. Unisys Corp., 986 F.2d 1146, 1150 (7th Cir.1993)). The market rate previously found by
the district court and approved of by this Court in Moriarty II is $165 per hour. Id. Thus, the
law of the case has established $165 per hour as the appropriate rate for the services of
Moriarty's counsel. If the district court no longer believes this rate to be appropriate, it [Cite
as: 429 F.3d at 719] must provide a comprehensive explanation. We remand this issue to
the district court for findings consistent with this opinion.
3. Substantial Offers to Settle
The district court's findings as to whether Svec made a substantial offer to settle are
perplexing. .... [¶] In Moriarty II, this Court stated that “[s]ubstantial settlement offers
should be considered by the district court as a factor in determining an award of reasonable
attorney's fees [, even where Rule 68 does not apply. See Sheppard v. Riverview Nursing
Center, Inc., 88 F.3d 1332, 1337 (4thCir. 1996).].” [Moriarty v. Svec II, 233 F.3d 955, 967
(7thCir. 2001)] The district court appears to have interpreted this language to mandate the
termination of fees following a substantial settlement offer. Nevertheless, the district court did
not abuse its discretion by cutting off the recovery of attorneys' fees after Svec made a
substantial settlement offer.
Moriarty ex rel. Local Union No. 727, I.B.T. Pension Trust, 429 F.3d 710, 717-719 (7thCir.
2005). Cited with approval in Serafinn v. Local 722, International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America, 597 F.3d 908, 919 (7thCir. 2010).
Schlacher (2009)
In a debt collection case that was resolved in three months, plaintiffs sought attorney’s fees of
$12,495 for the time of four attorneys. The trial court hacked the amount to about $6000, by
reducing hours and lowering hourly rates. In August 2009, the Seventh Circuit affirmed, and
explained that large fee awards need more justification by the trial court than small fee awards:
Although there is no precise formula for determining a reasonable fee, the district court
generally begins by calculating the lodestar-the attorney's reasonable hourly rate multiplied by
the number of hours reasonably expended. Hensley v. Eckerhart, 461 U.S. 424, 433-37, 103
S.Ct. 1933, 76 L.Ed.2d 40 (1983); Gautreaux v. Chi. Hous. Auth., 491 F.3d 649, 659 (7th
Cir.2007). The district court may then adjust that figure to reflect various factors including the
complexity of the legal issues involved, the degree of success obtained, and the public interest
advanced [Cite as: 574 F.3d at 857] by the litigation. Connolly v. Nat'l Sch. Bus Serv., Inc.,
177 F.3d 593, 597 (7th Cir.1999); Strange v. Monogram Credit Card Bank of Ga., 129 F.3d
943, 946 (7th Cir.1997). The district court must provide a clear and concise explanation for
its award, and may not “eyeball” and decrease the fee by an arbitrary percentage because of a
visceral reaction that the request is excessive. Small v. Richard Wolf Med. Instruments Corp.,
264 F.3d 702, 708 (7th Cir.2001); In re Cont'l Ill. Sec. Litig., 962 F.2d 566, 570 (7th
Cir.1992). In light of the district court's greater familiarity with the litigation, we review an
award of attorney's fees under a highly deferential abuse-of-discretion standard. Spegon v.
Catholic Bishop of Chi., 175 F.3d 544, 550 (7th Cir.1999).
On appeal, the plaintiffs argue first that the district court abused its discretion when it
concluded that “a figure that roughly equates to what the plaintiffs themselves recovered
seems reasonable.” As the plaintiffs point out, we have cautioned that fee awards “should not
be linked mechanically to a plaintiff's award,” Eddleman v. Switchcraft, Inc., 927 F.2d 316,
318 (7th Cir.1991), and that “[i]t cannot be the case that the prevailing party can never have a
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fee award that is greater than the damages award,” Deicher v. City of Evansville, 545 F.3d
537, 546 (7th Cir.2008). Thus, the plaintiffs argue, the district court committed an error of
law in awarding a fee that was directly proportional to their damages recovery.
The plaintiffs' argument, however, is persuasive only when the district court's comment
is read out of context. The court did not settle on a $6,500 fee award simply because it
mirrored the plaintiffs' damages. Instead, the court explained repeatedly that it was reducing
the requested fee because the collaboration among four attorneys had inevitably led to
duplicative work and excessive billing. Further, although the court observed that a fee award
roughly equivalent to the plaintiffs' damages recovery seemed reasonable, it explained that the
figures were only “coincidentally” equivalent. And, in any event, we have explained that,
although there is no rule requiring proportionality between damages and attorney's fees, a
district court may consider proportionality as one factor in determining a reasonable fee.
Moriarty v. Svec, 233 F.3d 955, 967-68 (7th Cir.2000).
The plaintiffs next challenge the $6,500 fee award because the district court did not
specifically enunciate the hourly rates or number of hours it had used to calculate that figure or
specify a lodestar amount. A district court facilitates appellate review by making specific
findings en route to a fee calculation, and therefore we have reversed when we could not
discern whether the district court arrived at its fee award by using the proper factors. See
Eddleman, 927 F.2d at 317-20. But we need not automatically reverse a fee award in the
absence of explicit findings about rates and hours. See Small, 264 F.3d at 709 (approving fee
award lacking “detailed explanation” where district court simply accepted defendant's
objections to billed time); Henry v. Webermeier, 738 F.2d 188, 193 (7th Cir.1984)
(explaining that there is no “Procrustean bed to which every fee proceeding must be fitted
despite its actual dimensions”). When substantial fees are at stake, the district court must
calculate the award with greater precision. See Vukadinovich v. McCarthy, 59 F.3d 58, 60 (7th
Cir.1995) (explaining that “proportioning of formality to stakes is a general principle of the
law” that applies to attorney's fee awards); In re Cont'l Ill. Sec. Litig., 962 F.2d at 570
(remanding because district court made substantial cuts to $9 million fee request without
sufficient explanation, but approving another court's [Cite as: 574 F.3d at 858] “meat-axe
approach” to fee petition in case where only $6,000 in fees were at stake); Lenard v. Argento,
808 F.2d 1242, 1247 (7th Cir.1987) (explaining that less elaborate findings are required when
a fee request is for “only a few hundred or a few thousand dollars”). But when fees are less
substantial, we may affirm so long as the district court exercised its discretion in a manner that
“is not arbitrary and is likely to arrive at a fair fee.” See Evans v. City of Evanston, 941 F.2d
473, 476-77 (7th Cir.1991); Tomazzoli v. Sheedy, 804 F.2d 93, 98 (7th Cir.1986).
Although the district court could have further elaborated how it calculated the precise fee
award by specifying the lodestar amount and which time entries were excessive, the reasons
for the court's ultimate fee award are apparent from the record. See Small, 264 F.3d at 709.
First, the court expressed its skepticism towards the requested hourly rates. It explained that it
made little sense for high-priced attorneys such as McLaughlin and Feofanov to continue
billing in the case after involving Warner, who was both less costly and the only FDCPA
[Fair Debt Collection Practices Act] specialist. After determining that the regular billing rates
of McLaughlin and Feofanov overstated their value in this straightforward case, the district
court was within its discretion to lower their rates. See Mathur v. Bd. of Trs. of S. Ill. Univ.,
317 F.3d 738, 743 (7th Cir.2003); Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 767 n. 16 (7th
Cir.1982). And because the only evidence of the market rate for the type of work involved in
this FDCPA case was the evidence supporting Warner's proposed rate, it was reasonable for
the district court to apply roughly this rate to McLaughlin and Feofanov, as the defendant had
suggested. See Mathur, 317 F.3d at 743 (explaining that, if attorney does not provide evidence
of her billing rate for comparable work, district court may look to evidence of what other
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attorneys in the community charge for that work). Similarly, with respect to Hobfoll, a thirdyear associate at McLaughlin's firm, the only evidence to support her requested rate of
$250/hour was two retainer agreements from employment-law cases. Because this did not
meet the plaintiffs' burden of demonstrating Hobfoll's market rate for FDCPA work, and
Hobfoll had been practicing for only three years, the district court was within its discretion to
lower the rate accordingly. See Uphoff v. Elegant Bath, Ltd., 176 F.3d 399, 409 (7th
Cir.1999) (explaining that when plaintiff does not meet its burden of proving counsel's market
rate, district court is entitled to make its own determination of reasonable hourly rate).
Second, the district court referred to factors permissible in reducing the billed time: it
observed that this was an uncomplicated, low-stakes case that settled within three months of
filing and without discovery. The court concluded that it was unreasonable to require the
defendant to pay for the time that four attorneys had collectively put into the case because their
work necessarily overlapped and one competent attorney would have sufficed. This
conclusion was not an abuse of discretion. Though efficiency can sometimes be increased
through collaboration, see Tchemkou v. Mukasey, 517 F.3d 506, 511-12 (7th Cir.2008),
overstaffing cases inefficiently is common, and district courts are therefore encouraged to
scrutinize fee petitions for duplicative billing when multiple lawyers seek fees. See Trimper v.
City of Norfolk, 58 F.3d 68, 76-77 (4th Cir.1995); Lipsett v. Blanco, 975 F.2d 934, 938 (1st
Cir.1992) (“A trial court should ordinarily greet a claim that several lawyers were required to
perform a single set of tasks with healthy skepticism.”); Jardien v. Winston Network, Inc.,
888 F.2d 1151, 1160 (7th Cir.1989). Here, the district court appears to have done that. The
defendant submitted detailed objections to the hours billed, [Cite as: 574 F.3d at 859]
identifying precisely which entries were excessive or redundant. The district judge expressly
sustained those objections, thereby implicitly finding that it was reasonable to compensate the
four attorneys collectively for only about twenty-three of the nearly forty hours of claimed
work. When added to the undisputed paralegal fees and costs, the total came to $6,322.70,
which the district court apparently rounded up to $6,500. Although greater detailed findings
in calculating the fee award might have been required in a higher-stakes case, the district court
arrived at a fee that was reasonable in relation to the difficulty and stakes of this case, see
Bankston v. Illinois, 60 F.3d 1249, 1256 (7th Cir.1995), and provided an explanation that was
“limited but sufficient” to enable us to determine that it did not abuse its discretion, see Small,
264 F.3d at 709; Uphoff, 176 F.3d at 409.
Schlacher v. Law Offices of Phillip J. Rotche, 574 F.3d 852, 856-859 (7thCir. 2009).
Anderson v. AB Painting and Sandblasting (2009)
In August 2009, the Seventh Circuit discussed proportionality in the context of attorney's fees in a
pension case:
In this case, the district court was concerned with the concept of proportionality between
the attorney's fees and the actual damages. Proportionality can refer [Cite as: 578 F.3d at
545] to multiple concepts in the realm of attorney's fees. One of these concepts addresses the
situation where a plaintiff recovers a very small percentage of the damages claimed and the
attorney's fees are consequently reduced. Cole v. Wodziak, 169 F.3d 486 (7th Cir.1999),
which the district court wrongly relied on, is such a case. This type of proportionality seems
to be losing favor and is irrelevant in our case because the Funds recovered the entire amount
of the claimed deficiency. Compare Cole, 169 F.3d at 489 (“[R]ecovering less than 10% of
the demand is a good reason to [abandon the lodestar method, apply Farrar v. Hobby, 506
U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), and] curtail the fee award substantially.”)
with Estate of Enoch ex rel. Enoch v. Tienor, 570 F.3d 821, 822-23 (7th Cir.2009)
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(recovering less than 7% of amount sought is not reason to apply Farrar if damages are not
nominal).
The proportionality we address here involves a comparison between a plaintiff's damages
and his attorney's fees. In this context, we have “rejected the notion that the fees must be
calculated proportionally to damages.” Alexander v. Gerhardt Enterprises, Inc., 40 F.3d 187,
194 (7th Cir.1994); see Wallace v. Mulholland, 957 F.2d 333, 339 (7th Cir.1992); see also
Estate of Borst v. O'Brien, 979 F.2d 511, 516-17 (7th Cir.1992); see also Littlefield v.
McGuffey, 954 F.2d 1337, 1350-51 (7th Cir.1992).
This seems to us to be the only logical position, considering the purpose of attorney's fees
statutes. Fee-shifting provisions signal Congress' intent that violations of particular laws be
punished, and not just large violations that would already be checked through the incentives of
the American Rule. “The function of an award of attorney's fees is to encourage the bringing
of meritorious ... claims which might otherwise be abandoned because of the financial
imperatives surrounding the hiring of competent counsel.” City of Riverside v. Rivera,
477 U.S. 561, 578, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986) (quotation marks and citation
omitted). Or, more simply stated, fee-shifting “helps to discourage petty tyranny.” Barrow v.
Falck, 977 F.2d 1100, 1103 (7th Cir.1992).
Because Congress wants even small violations of certain laws to be checked through
private litigation and because litigation is expensive, it is no surprise that the cost to pursue a
contested claim will often exceed the amount in controversy. Tuf Racing Products, Inc. v.
American Suzuki Motor Corp., 223 F.3d 585, 592 (7th Cir.2000). That is the whole point of
fee-shifting — it allows plaintiffs to bring those types of cases because it makes no difference
to an attorney whether she receives $20,000 for pursuing a $10,000 claim or $20,000 for
pursuing a $100,000 claim. See id. Fee-shifting would not “discourage petty tyranny” if
attorney's fees were capped or measured by the amount in controversy. Barrow, 977 F.2d at
1103; see Tuf Racing, 223 F.3d at 592.
Some of our cases have expressed concern where attorney's fees overshadowed the
damages awarded, but only because some other element of the case did not seem reasonable.
For example, in Perez v. Z Frank Oldsmobile, Inc., 223 F.3d 617, 625 (7th Cir.2000), we
noted that the fee was “awfully hard to swallow.” But our concern was not so much with the
amount of the fee as with the disparity between the number of hours billed and the seeming
simplicity of the case (1,200 hours were spent pursuing a rolled-back odometer claim). See id.
That was a fair observation. Simple cases should require fewer hours than complex cases.
And many claims for small damages amounts will be simple cases. But not always; it works
as a rule of thumb, but not as a rule of law. [Cite as: 578 F.3d at 546] Which is why we
simply stated that the “question requires careful attention on remand.” Perez, 223 F.3d at 625.
This is also how we read Moriarty v. Svec, 233 F.3d 955 (7th Cir.2000), another case
cited by the district court. In Moriarty, we stated that, “[w]hile ... disproportionality is not
determinative and this court has approved attorney's fees many times the amount of damages
recovered, ... the district court's fee order should evidence increased reflection before awarding
attorney's fees that are large multiples of the damages recovered or multiples of the damages
claimed.” Id. at 968. We quickly reiterated “that any disproportionality that may be present in
this case does not mean that the amount of attorney's fees awarded ... was an abuse of
discretion, but only that the district court should consider such proportionality factors in
exercising its discretion in fashioning a reasonable attorney's fee.” Id.
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To say that a court should give “increased reflection” before awarding attorney's fees that
are several times the amount of the actual damages is nothing more than to say that a
comparatively large fee request raises a red flag.60 As we just said, in many cases the
amount in controversy and the complexity of the case will track with one another. But small
claims can be complex and large claims can be very straightforward. So while a fee request
that dwarfs the damages award might raise a red flag, measuring fees against damages will
not explain whether the fees are reasonable in any particular case.
Reasonableness has nothing to do with whether the district court thinks a small claim was
“worth” pursuing at great cost. Fee-shifting statutes remove this normative decision from the
court.61 If a party prevails, and the damages are not nominal, then Congress has already
determined that the claim was worth bringing. The court must then assume the absolute
necessity of achieving that particular result and limit itself to determining whether the hours
spent were a reasonable means to that necessary end.FN2
FN2. Of course, if a party achieves only partial success as that term is used in Hensley,
then the district court must determine how many hours were related to advancing the
winning claims. See Hensley, 461 U.S. at 434-37, 103 S.Ct. 1933; see also Ustrak v.
Fairman, 851 F.2d 983, 988 (7th Cir.1988) (“A partially prevailing plaintiff should be
compensated for the legal expenses he would have borne if his suit had been confined to
the ground on which he prevailed plus related grounds within the meaning of Hensley.”);
see also Jaffee, 142 F.3d at 413-17 (explaining how unsuccessful claims can relate to
successful ones). Since the Funds succeeded on all claims, we need not explore this topic
any further.
For example, it is absolutely permissible to spend $100,000 litigating what is known to
be a $10,000 claim if that is a reasonable method of achieving the result. But it might not be a
reasonable method. Proportionality then, where useful at all, could alert the court to situations
where we might expect that the same result could have been achieved more efficiently. But if,
for some reason, the hours expended were reasonable in a particular case, then so is the fee.
It seems that the claim in front of us could have been resolved at a greatly reduced cost if
AB Painting had cooperated with discovery requests and settlement discussions, obeyed the
district court's orders, and not filed a series of frivolous motions after the court had already
entered judgment for the Funds. The district court did not suggest how the Funds could have
resolved the case more efficiently. So even though the fee request was more than seven times
the amount of damages, there may have been good cause.
[Cite as: 578 F.3d at 547]
And even in a straightforward case, where an early resolution is reached, it would not be
surprising to find that the cost of bringing the claim exceeded the amount in controversy.
Again, fee-shifting is designed to encourage such claims. See Tuf Racing, 223 F.3d at 592.
Anderson v. AB Painting and Sandblasting Inc., 578 F.3d 542, 544-547 (7thCir. 2009).
60
Boldface added by Standler.
Note added by Standler: this may be true in cases where the fee-shifting is mandatory, but not
true in copyright cases, where the fee-shifting is discretionary with the trial judge.
61
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miscellaneous cases
In 1988, the Seventh Circuit found requested attorney’s fees to be excessive:
... the single most important criterion in evaluating the appropriateness of such awards is their
“reasonableness.” See 42 U.S.C. § 1988 (district court may allow prevailing party a
“reasonable attorney's fee”); see also Hensley, 461 U.S. at 434, 103 S.Ct. at 1939 (hours
“reasonably expended” are compensable); Gekas v. Attorney Registration and Disciplinary
Commission, 793 F.2d 846, 853 (7th Cir.1986). Accordingly, where the district court has
ordered reimbursement for fees and costs that are objectively judged to have been unnecessary
for the competent preparation of a case for trial or appeal, an abuse of discretion may be
found. Cf. Grendel's Den, Inc. v. Larkin, 749 F.2d 945 (1st Cir.1984); see also Bonner v.
Coughlin, 657 F.2d 931, 934-35 (7th Cir.1981).
Charles v. Daley, 846 F.2d 1057, 1075 (7thCir. 1988).
•
Munson v. Friske, 754 F.2d 683, 697 (7thCir. 1985) (“The courts have held that fee awards
are an equitable matter, thereby permitting the district court to consider the relative wealth of
the parties. See, e.g., Faraci v. Hickey-Freeman Co., 607 F.2d 1025, 1028 (2d Cir.1979).
When a court determines that a plaintiff can afford to pay the award, the congressional goal of
discouraging frivolous litigation demands that the full fees be levied. Arnold v. Burger King
Corp., 719 F.2d 63, 68 (4th Cir.1983), cert. denied, 469 U.S. 826, 105 S.Ct. 108, 83 L.Ed.2d
51 (1984); Faraci v. Hickey-Freeman, 607 F.2d at 1028.”).
In January 2010, the Seventh Circuit recognized the continuing validity of the U.S. Supreme
Court's decision in Hensley:
The touchstone for a district court's calculation of attorney's fees is the lodestar method,
which is calculated by multiplying a reasonable hourly rate by the number of hours reasonably
expended. [Schlacher v. Law Offices of Phillip J. Rotche & Assocs., 574 F.3d 852, 856
(7thCir. 2009)] (citing Hensley v. Eckerhart, 461 U.S. 424, 433-37, 103 S.Ct. 1933, 76
L.Ed.2d 40 (1983)). If necessary, the district court has the flexibility to “adjust that figure to
reflect various factors including the complexity of the legal issues involved, the degree of
success obtained, and the public interest advanced by the litigation.” Id. at 856-57. “The
standard is whether the fees are reasonable in relation to the difficulty, stakes, and outcome of
the case.” Connolly v. Nat'l Sch. Bus. Serv., Inc., 177 F.3d 593, 597 (7th Cir.1999) (quoting
Bankston v. Illinois, 60 F.3d 1249, 1256 (7th Cir.1995)).
Gastineau v. Wright, 592 F.3d 747, 748-749 (7thCir. 2010).
See also Anderson v. AB Painting and Sandblasting Inc., 578 F.3d 542, 544 (7thCir. 2009).
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Ninth Circuit
I have not done a search of Ninth Circuit law on the topic of lodestar method and the concept of
reasonable fees. I found the following case during a search on another topic.
In September 2000, the U.S. Court of Appeals in Arizona wrote in a wrongful termination case:
This circuit requires a district court to calculate an award of attorneys' fees by first
calculating the “lodestar.” See, e.g., Morales v. City of San Rafael, 96 F.3d 359, 363 (9th
Cir.1996) (reversing the district court's award of attorneys' fees because the district court failed
to calculate a lodestar figure and assess the extent to which the recognized bases for adjusting
that figure applied). “The ‘lodestar’ is calculated by multiplying the number of hours the
prevailing party reasonably expended on the litigation by a reasonable hourly rate,” id., and it
presumably incorporates consideration of the results obtained by the prevailing litigant, as
required by Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), as
well as a number of other relevant considerations, see Morales, 96 F.3d at 363 n. 8. After
computing the lodestar, the district court should assess whether additional considerations that
this court has enumerated, see Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th
Cir.1975), require the district court to adjust the figure, see Morales, 96 F.3d at 363-64.
Caudle v. Bristow Optical Co., Inc., 224 F.3d 1014, 1028 (9thCir. 2000).
The Kerr factors mentioned in Caudle include:
[In] Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 [, 717-719] (5thCir.
1974), the Fifth Circuit found it necessary to vacate the award of attorney's fees and remand
for reconsideration in light of the following guidelines: (1) the time and labor required, (2) the
novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal
service properly, (4) the preclusion of other employment by the attorney due to acceptance of
the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations
imposed by the client or the circumstances, (8) the amount involved and the results obtained,
(9) the experience, reputation, and ability of the attorneys, (10) the ‘undesirability’ of the case,
(11) the nature and length of the professional relationship with the client, and (12) awards in
similar cases. These guidelines are consistent with those recommended by the Code of
Professional Responsibility of the American Bar Association, Disciplinary Rule 2-106.
Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9thCir. 1975), cert. den. sub nom Perkins v.
Screen Extras Guild, Inc., 425 U.S. 951 (1976).
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Fees Make Plaintiff Whole ?
There are a few cases during the 1960s to 1980s that awarded attorney’s fees to a prevailing
plaintiff for reasons that included “making plaintiff whole”, see, e.g.:
• Davis v. E. I. DuPont de Nemours & Co., 257 F.Supp. 729, 731 (S.D.N.Y. 1966)
(Awarding plaintiff $25,000 in damages and $15,000 in counsel fees: “Therefore, I believe
that the commendable aim of making plaintiff whole has largely been achieved.”);
•
McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323 (9thCir. 1987) (“Because section 505
is intended in part to encourage the assertion of colorable copyright claims, Roth, 787 F.2d at
57, to deter infringement, Diamond v. Am-Law Publishing Corp., 745 F.2d 142, 148 (2dCir.
1984), and to make the plaintiff whole, Davis v. E.I. DuPont de Nemours & Co.,
257 F.Supp. 729, 731 (S.D.N.Y.1966), fees are generally awarded to a prevailing plaintiff.
Diamond, 745 F.2d at 148.”), cert. denied, 493 U.S. 1075 (1990).
•
Roulo v. Russ Berrie & Co., Inc., 886 F.2d 931, 942 (7thCir. 1989) (“Attorney’s fees under
[17 U.S.C. § 505] have been awarded for the purposes of encouraging the assertion of
colorable copyright claims, deterring infringement, and making the plaintiff whole. McCulloch
v. Albert E. Price, Inc., 823 F.2d 316, 321 [sic] (9thCir. 1987). ), cert. denied, 493 U.S. 1075
(1990).
Note that some of these pre-1994 cases were overruled on other grounds by Fogerty v. Fantasy,
Inc., 510 U.S. 517 (1994).
I strongly support awarding attorney’s fees to a prevailing plaintiff in copyright cases, but
making the plaintiff whole is a bad reason to award attorney’s fees. In American law, torts
damages make the plaintiff whole. Under the American rule, plaintiff is generally not reimbursed
for attorney’s fees in a tort case.
In cases with potential large damages (e.g., wrongful death, medical malpractice with
permanent injury), plaintiff can probably find an attorney who will take the case on a contingency
fee. In torts with small damages and no fee-shifting statute (or with a discretionary fee-shifting
statute like 17 U.S.C. § 505), plaintiffs may be unable to afford to bring their case in court. If the
damages are too small to justify the expense of litigation, then either (1) the claim is insignificant
(i.e., de minimis) or (2) the damages should be increased, perhaps by awarding punitive damages.
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Registration of Copyright
The Copyright Act of 1976, 17 U.S.C. § 505, says the court may award attorney’s fees to the
prevailing party, “except as otherwise provided by this title”.
The “otherwise” is unspecified in § 505, but 17 U.S.C. § 412 says that attorney’s fees can not
be awarded for infringement before the effective date of the copyright registration in the Copyright
Office. Section 412(2) allows attorney’s fees for works that were published and then registered in
the Copyright Office within three months of first publication, but this three-month grace period
does not apply to unpublished works. § 412(1). 17 U.S.C. § 101 defines “publication” as the
distribution “of a work to the public by sale or other transfer of ownership”. Posting an essay at a
website is a “public display”, not publication.
In the year 2005, section 412 was modified by inserting a long clause about preregistration of
copyright, which makes the section difficult to understand. The version of § 412 in years 1976-89
says:
In any action under this title, other than an action instituted under section 411(b),
no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505,
shall be made for —
(1) any infringement of copyright in an unpublished work commenced before the effective
date of its registration; or
(2) any infringement of copyright commenced after first publication of the work and before
the effective date of its registration, unless such registration is made within three months
after the first publication of the work.
17 U.S.C. § 412 (enacted 1976, current 1989).
Quoted in Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27, 33, n.5 (2dCir.
1982); Evans Newton Inc. v. Chicago Systems Software, 793 F.2d 889, 896, n.9 (7thCir. 1986)
(typographical error omits one “the”).
Note that a literal reading of § 412 applies equally to both prevailing plaintiffs and prevailing
defendants, because this section says “no award ... of attorney’s fees” without specifying to whom
the award is made. To learn if courts had accepted this literal reading of § 412, which appears to
bar an award of attorney’s fee to a prevailing defendant if the copyright was not registered before
the alleged infringement, I did the following legal research.
The only appellate case I found in May 2010 that is relevant to this literal interpretation of
§ 412 was written by the U.S. Court of Appeals in Maryland in August 2000. In this case, a
creative attorney argued that the U.S. Supreme Court’s command in Fogerty, 510 U.S. at 534 that
“prevailing plaintiffs and prevailing defendants are to be treated alike” also applied to § 412. I do
not find the Court of Appeals’ discussion of this argument convincing, except for the following
two sentences.
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Moreover, by its plain language, § 412 only applies to plaintiffs who assert copyright
infringement claims and not to defendants who successfully defend against such
claims.[footnote quoting § 412 omitted] Finally, it simply defies logic to conclude that an
unsuccessful plaintiff's additional failure timely to register its copyright serves to bar a court
from awarding attorneys' fees to the prevailing defendant.
O’Well Novelty Co. v. Offenbacher, Inc., 2000 WL 1055108 at*7, 55 U.S.P.Q.2d 1828 (4thCir.
2000). Instead, I think the attorney’s argument fails because Fogerty interprets only § 505 —
Fogerty mentions neither § 412 nor registration of copyright. Furthermore, the content of § 412 is
about remedies available to a plaintiff, so it makes sense — although Congress did not explicitly
say it — that this section only applies to plaintiffs. Still further, there is no good reason why a
prevailing defendant should be denied reimbursement of attorney’s fees because of a delay in
registration by plaintiff. Therefore, I believe the conclusion in O’Well Novelty is correct: a literal
reading of § 412 is not plausible that “no award of ... attorney’s fees” applies to a prevailing
defendant.
Note that O’Well Novelty is not precedential, because it was (1) issued by the Fourth Circuit
and is not binding outside the Fourth Circuit, and (2) not published in the Federal reporter, so it is
not precedential in the Fourth Circuit.62 Nonetheless, I believe that O’Well Novelty is correct that
§ 412 only applies to plaintiffs.
There is an unreported District Court opinion that also condemns this argument:
Finally, [pro se] Plaintiff also argues that attorney's fees should not be awarded because
the alleged infringement commenced before the effective date of copyright registration. Opp.
at 28. Plaintiff cites no support for this argument, and the authority is to the contrary. In fact,
one treatise author has explained that: “Very infrequently, the argument is advanced by a
losing plaintiff that defendant cannot be awarded its attorney's fees because the work was not
registered within three months from the date of first publication. This profoundly ignorant
argument should be met with Rule 11 sanctions.... Both of the circuits to have had the
misfortune to have the argument presented have correctly rejected it.” William F. Patry,
PATRY ON COPYRIGHT § 22:204 (2008); see also O'Well Novelty Co. v. Offenbacher, Inc.,
No. 99-1949, 2000 WL 1055108, at *7 (4thCir. 2000) (“it simply defies logic to conclude
that an unsuccessful plaintiff's additional failure timely to register its copyright serves to bar a
court from awarding attorney fees to the prevailing defendant”)). If the court makes a finding
of noninfringement, “there appears to be no requirement that the work be registered in order
to award attorney's fees to a prevailing defendant.” Melville B. Nimmer and David Nimmer,
NIMMER ON COPYRIGHT, 14.10[A] n. 3, Matthew Bender, 2007; see also, Robinson v. Lopez,
2003 U.S. Dist. LEXIS 24382, at *11-12, 2003 WL 23162906, 69 U.S.P.Q.2D (BNA) 1241
(C.D.Cal. 2003) (awarding defendant attorney's fees under Section 505 even though plaintiff
did not register the work at issue with the Copyright Office). For the above reasons, an award
of fees is proper.
Yue v. Storage Technology Corp., Not Reported in F.Supp.2d, 2008 WL 4185835 at *5 (N.D.Cal.
2008).
Henry v. Murray, 1993 WL 22008 at *1 (4thCir 1993) (An opinion not published in the
FEDERAL Reporter “has no precedential value”.).
62
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See also Lucas v. Wild Dunes Real Estate, Inc., 197 F.R.D. 172, 177 (D.S.C. 2000)
(“However, § 412 only limits an award of attorneys' fees as costs to a plaintiff when the copyright
infringement occurred before registration; § 412 is inapplicable to any claim by a defendant for
attorneys’ fees. See Screenlife Establishment v. Tower Video, Inc., 868 F.Supp. 47, 50
(S.D.N.Y.1994) ....”).
Section 412 probably should explicitly say that a prevailing plaintiff can not recover attorney’s
fees for infringement before the registration date. At the time § 412 was written in 1976, it was
common for only prevailing plaintiffs to be awarded attorney’s fees,63 so the author of § 412 may
have assumed that attorney’s fees would be awarded only to a prevailing plaintiff.
In June 2008, a U.S. Court of Appeals in Washington state explained the purpose of § 412:
We also recognize that § 412 is designed to implement two fundamental purposes. First,
by denying an award of statutory damages and attorney's fees where infringement takes place
before registration, Congress sought to provide copyright owners with an incentive to register
their copyrights promptly. See H.R.Rep. No. 94-1476, at 158 (1976), as reprinted in 1976
U.S.C.C.A.N. 5659, 5774 (“Copyright registration ... is useful and important to users and the
public at large ... and should therefore be induced in some practical way.”). Second, § 412
encourages potential infringers to check the Copyright Office's database. See Johnson v.
Jones, 149 F.3d 494, 505 (6thCir. 1998). To allow statutory damages and attorneys' fees
where an infringing act occurs before registration and then reoccurs thereafter clearly would
defeat the dual incentives of § 412. See Johnson, 149 F.3d at 505 (“These purposes would be
thwarted by holding that infringement is ‘commenced’ for the purposes of § 412 each time an
infringer commits another in an ongoing series of infringing acts.”).
Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 700 (9thCir. 2008).
In the context of a prevailing plaintiff seeking attorney’s fees from an infringing defendant,
courts have sometimes stated that § 412 applies to plaintiffs.
• Hays v. Sony Corp. of America, 847 F.2d 412, 415 (7thCir. 1988) (Posner, J.) ("The plaintiffs
could not obtain statutory damages or attorney's fees, because they did not register their
copyright within three months after first publishing the manual ...."), abrogated on other
grounds, sub nom. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990).
•
Johnson v. Jones, 149 F.3d 494, 505 (6thCir. 1998) ("Thus, [Plaintiff] Johnson cannot
recover statutory damages or attorney's fees under the Copyright Act if [Defendant] Tosch's
infringement “commenced” before the copyright was registered.").
•
On Davis v. The Gap, Inc., 246 F.3d 152, 158, n.1 (2dCir. 2001) (“17 U.S.C. § 412 specifies
that a copyright holder is not entitled to elect statutory damages or receive attorney's fees under
§§ 504 and 505 if ‘any infringement of copyright commenced after first publication of the
work and before the effective date of its registration, unless such registration is made within
three months after the first publication of the work.’ ”).
Prevailing defendants needed to prove plaintiff’s claims were baseless or unreasonable, as
explained at page 9, above, before a prevailing defendant could recover attorney’s fees.
63
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•
Troll Co. v. Uneeda Doll Co., 483 F.3d 150, 158 (2dCir. 2007) ("Under 17 U.S.C. § 412, a
plaintiff may not recover statutory damages or attorney's fees for any infringement
‘commenced’ before the effective date of a copyright's registration.").
Of course, these quotations are correct that § 412 does apply to plaintiffs. However, these
quotations do not answer the question of whether § 412 also bars attorney’s fees to a prevailing
defendant.
I have found three law review articles that mention this asymmetry in § 412:
While the Supreme Court focuses on the need for “evenhanded” treatment, [footnote to
Fogerty, 510 U.S. at 521] section 412 destroys the level playing field, since there is no
equivalent statutory bar applicable to defendants. Given the current state of the law, copyright
owner without a prior registration would be foolhardy to sue where the case was not openand-shut; she would have only limited remedies if she won, and run the risk of paying the
defendant’s attorney’s fees in addition to her own if she lost.
Shira Perlmutter, “Freeing Copyright From Formalities,” 13 CARDOZO ARTS & ENTERTAINMENT
LAW JOURNAL 565, 574 (1995).
The current author of NIMMER ON COPYRIGHT wrote:
When a late-registered work is at issue, the defendant may thus recover its fees,
notwithstanding that the plaintiff in the very same action may not. The upshot is that the
structure of the Act lies far afield from evenhandedness, even in the post-Fogerty world.
David Nimmer, “Even After the Court’s Ruling, The Old Man Remains Stuck Down the Road,”
39 WILLIAM & MARY LAW REVIEW 65, 84 (Oct 1997).
See also Jeffrey Edward Barnes, “Attorney’s Fee Awards in Federal Copyright Litigation
After Fogerty,” 47 UCLA Law Review 1381, 1387, n.23 (June 2000) (“If section 505 were to be
applied in a truly ‘evenhanded’ manner, prevailing defendants theoretically should not be entitled to
a fee award if the nonprevailing plaintiff failed to meet the requirements of section 412.”).
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Appeal of Attorney’s Fees
In January 2011, I did legal research for an appeal of attorney’s fees in a copyright case in the
Seventh Circuit. There is a trend to award the actual fees spent by prevailing party.64 Part of the
justification is that the prevailing party’s willingness to pay that hourly rate makes the fees
reasonable.65
A. Standard of Review
The standard of review is abuse of discretion. See, e.g., JCW Investments, Inc. v. Novelty,
Inc., 482 F.3d 910, 920 (7thCir. 2007) (“This court reviews attorneys’ fees decisions for abuse of
discretion.”); Bourne Co. v. Hunter Country Club, Inc., 990 F.2d 934, 939 (7thCir. 1993)
(Attorney’s fees under 17 U.S.C. § 505 “will be reversed only upon an abuse of discretion.”).
The Second Circuit has also held the standard of review of an award of attorney’s fees is
abuse of discretion. A famous copyright case, Bender, explains this is a highly deferential
standard:
“The standard of review of an award of attorney's fees is highly deferential to the district
court.” Alderman v. Pan Am World Airways, 169 F.3d 99, 102 (2d Cir. 1999) (internal
quotation marks omitted). “Attorney's fees must be reasonable in terms of the circumstances
of the particular case, and the district court's determination will be reversed on appeal only for
an abuse of discretion.” Id. “ ‘Abuse of discretion’ is one of the most deferential standards of
review; it recognizes that the district court, which is intimately familiar with the nuances of the
case, is in a far better position to make certain decisions than is an appellate court, which must
work from a cold record.” In re Bolar Pharm. Co. Sec. Litig., 966 F.2d 731, 732 (2d Cir.
1992) (per curiam). However, “[a] district court necessarily abuses its discretion if its
conclusions are based on an erroneous determination of law,” Revson v. Cinque & Cinque,
P.C., 221 F.3d 71, 78 (2d Cir. 2000); see also Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996,
1012 (2d Cir. 1995) (noting that this Court may reverse an award of attorneys' fees “if the
district court applied the wrong legal standard” (citations omitted)), or “on a clearly erroneous
assessment of the evidence,” Kerin v. United States Postal Serv., 218 F.3d 185, 188-89 (2d
Cir. 2000).
Matthew Bender & Co., Inc. v. West Publishing Co., 240 F.3d 116, 121 (2dCir. 2001)
64 JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007) (“When ‘a plaintiff
wins a suit and is entitled by statute to a reasonable attorneys' fee, the entitlement extends to the fee he
reasonably incurs in defending the award of that fee. Otherwise the fee will undercompensate.’
Gorenstein Enters., 874 F.2d at 438 (internal citation omitted).”). The same result is obtained in the
lodestar method, endorsed by the U.S. Supreme Court, see above, beginning at page 82.
See, e.g., Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 438 (7thCir.
2004) (“The best evidence of the value of the lawyer’s services is what the client agreed to pay him.”);
Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 184 (2dCir.
2008) (“Bearing these background principles in mind, the district court should, in determining what a
reasonable, paying client would be willing to pay, consider factors including, ....”).
65
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A U.S. Court of Appeals in Tennessee applied the abuse of discretion standard and tersely
explained how a trial court might abuse its discretion:
We review the district court's decision to award attorneys' fees and costs to [defendant]
for abuse of discretion. Rhyme Syndicate, 376 F.3d at 625-26. There is an abuse of discretion
“if the district court relied on erroneous findings of fact, applied the wrong legal standard,
misapplied the correct legal standard when reaching a conclusion, or made a clear error of
judgment.” Nafziger v. McDermott Int'l, Inc., 467 F.3d 514, 522 (6th Cir.2006) (brackets and
internal quotation marks omitted), cert. denied, 550 U.S. 969, 127 S.Ct. 2886, 167 L.Ed.2d
1153 (2007).
Bridgeport Music, Inc. v. WB Music Corp., 520 F.3d 588, 592 (6thCir. 2008).
de novo review on matters of law
At least since October 1987, the Seventh Circuit has recognized that matters of law in an
appeal about attorney’s fees are decided de novo. In re Burlington Northern, Inc. Employment
Practices Litigation, 832 F.2d 430, 433 (7thCir. 1987) (“Deciding whether or not the principles of
a particular case apply to a specific set of facts is something a district court does as a matter of law.
We review a district court’s legal determinations de novo.”).
In 1998, the Seventh Circuit gave a more detailed explanation that “alleged legal errors” made
by a trial judge in attorney’s fee-shifting disputes would be decided on appeal de novo.
However, when a district court denies attorney's fees to a prevailing party under § 1988
as a result of applying a principle of law, the justifications for the generally deferential
standard of review are absent. Therefore, as with all questions of law, we review de novo the
alleged legal errors made by the district court in denying fees. See, e.g, Zagorski v. Midwest
Billing Servs., Inc., 128 F.3d 1164, 1166 (7th Cir.1997) (per curiam); Spanish Action Comm.
v. City of Chicago, 811 F.2d 1129, 1134 (7th Cir.1987); see also Cabrales v. County of Los
Angeles, 935 F.2d 1050, 1052 (9th Cir.1991) (“While awards of attorney's fees pursuant to
42 U.S.C. § 1988 are generally reviewed for abuse of discretion, any elements of legal
analysis and statutory interpretation which figure in the district court's decision are reviewable
de novo.”) (citation and internal quotation omitted). In this case, the district court denied fees
solely by applying rules of law: The court concluded that fees incurred on, or as a result of, an
unsuccessful evidentiary argument are not compensable because the argument did not
contribute to a successful claim. We therefore review the district court's award of fees de
novo.
Jaffee v. Redmond, 142 F.3d 409, 412-413 (7thCir. 1998).
Cited in Moriarty v. Svec, 233 F.3d 955, 963 (7thCir. 2000) (“However, when fees are adjusted
because of a principle of law our review is de novo.”).
A more recent case is: Cornucopia Institute v. U.S. Dept. of Agriculture, 560 F.3d 673, 675
(7thCir. 2009) ("Federation of Advertising Industry Representatives, Inc. v. City of Chicago, 326
F.3d 924, 932 (7th Cir.2003) (“[W]hen ... the district court's denial of an attorney’s fee award rests
on the application of a principle of law, our review is de novo.”)."). Federation cites Jaffee v.
Redmond, which was quoted above.
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B. Must Consider All Relevant Factors
The Seventh Circuit has explicitly held that the trial judge must consider all of the relevant
factors. McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 572 (7thCir. 2003) (“But the
district court in this case applied the proper legal standard, considered all the relevant factors,
appropriately exercised its discretion, and articulated its reasons for doing so; it was required to do
no more.”).
In 2007, the Seventh Circuit mentioned the factors in Lieb, which were quoted with approval
by the U.S. Supreme Court in Fogerty,
... a finding of frivolity or bad faith is not required under the Copyright Act, which permits an
award of attorneys' fees and costs in the court's discretion. 17 U.S.C. § 505. That discretion is
guided by many factors, including “frivolousness, motivation, objective unreasonableness
(both in the factual and in the legal components of the case) and the need in particular
circumstances to advance considerations of compensation and deterrence.” Fogerty v.
Fantasy, Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) (internal
quotation omitted). We have said that the two most important considerations are “the strength
of the prevailing party's case and the amount of damages or other relief the party obtained.”
Assessment Technologies, 361 F.3d at 436; see also Gonzales v. Transfer Technologies, Inc.,
301 F.3d 608, 610 (7th Cir.2002).
JCW Investments, Inc. v. Novelty, Inc., 509 F.3d 339, 342 (7thCir. 2007).
This focus on the factors in Fogerty is proper, because a U.S. Supreme Court opinion is
controlling law in the Seventh Circuit.
In copyright cases in other circuits, I have found:
• Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9thCir. 1996) (“Because it is not
apparent from the district court's decision that it considered the factors listed in Fogerty,
particularly the goal of deterring future copyright infringements, we remand for
reconsideration of this issue.”).
•
Gay Officers Action League v. Puerto Rico, 247 F.3d 288, 292–93 (1stCir. 2001) (“Apart
from mistakes of law — which always constitute abuses of a court’s discretion — we will set
aside a fee award only if it clearly appears that the trial court ignored a factor deserving
significant weight, relied upon an improper factor, or evaluated all the proper factors (and no
improper ones), but made a serious mistake in weighing them.” [two citations omitted].).
This holding from Gay Officers Action League is well accepted in the First Circuit, e.g.:
• Flynn v. AK Peters, Ltd., 377 F.3d 13, 26 (1stCir. 2004) (trademark);
• Boston's Children First v. City of Boston, 395 F.3d 10, 13 (1stCir. 2005) (civil rights);
• Burke v. McDonald, 572 F.3d 51, 63 (1stCir. 2009) (civil rights);
• Hutchinson ex rel. Julien v. Patrick, 636 F.3d 1, 13 (1stCir. 2011) (Americans with Disabilities
Act);
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•
•
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Spooner v. EEN, Inc., 644 F.3d 62, 66 (1stCir. 2011) (copyright);
Airframe Systems, Inc. v. L-3 Communications Corp., 658 F.3d 100, 108, 100 U.S.P.Q.2d
1133 (1stCir. 2011).
In other circuits and in noncopyright cases, ignoring a relevant factor can be abuse of discretion
that will justify a remand:
• Faraci v. Hickey-Freeman Co., Inc., 607 F.2d 1025, 1028 (2dCir. 1979) (“Although fee
awards are a matter within the discretion of the trial judge, appellate courts will intervene when
the trier omits a relevant factor from his analysis.”);
•
In re Kunstler, 914 F.2d 505, 524 (4thCir. 1990) (“... a monetary sanction [under Federal
Rule 11 of Civil Procedure] imposed without any consideration of ability to pay would
constitute an abuse of discretion.”);
•
Anthuis v. Colt Industries Operating Corp., 971 F.2d 999, 1012 (3dCir. 1992) (ERISA case:
“... we must require that, in each instance in which the district court exercises its fee-setting
discretion, it must articulate its considerations, its analysis, its reasons and its conclusions
touching on each of the five factors delineated in Ursic [ v. Bethlehem Mines, 719 F.2d 670,
673 (3dCir. 1983)].”);
•
Gaeth v. Hartford Life Ins. Co., 538 F.3d 524, 529 (6thCir. 2008) (ERISA case: “No single
factor is determinative, and thus, the district court must consider each factor before exercising
its discretion.” quoting Moon v. Unum Provident Corp., 461 F.3d 639, 642-643 (6thCir.
2006).);
•
Garner v. Cuyahoga County Juvenile Court, 554 F.3d 624, 643 (6thCir. 2009) (“Without
some discussion of the basis of the district court's reasoning, meaningful appellate review is
impossible. We conclude that the district court's failure to address this salary information
amounts to a failure to provide a ‘clear and concise explanation of its reasons for the fee
award,’ and we are therefore disinclined to give the degree of deference typically afforded to a
district court's calculations of fee awards. See Gonter, 510 F.3d [610] at 616 (citation and
internal quotation marks omitted).”).
•
Saad v. GE HFS Holdings, Inc., 366 Fed.Appx. 593, 607 (6thCir. 2010) (“In determining the
amount of attorneys' fees that is reasonable, all relevant factors shall be considered, ....”);
•
Simonia v. Glendale Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1121 (9thCir. 2010)
(ERISA case: “We therefore hold that after determining a litigant has achieved some degree
of success on the merits, district courts must still consider the Hummell [ v. S.E. Rykoff &
Co., 634 F.2d 446, 453 (9thCir. 1980)] factors before exercising their discretion to award fees
under [29 U.S.C.] § 1132(g)(1).”);
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Conclusion
The old law (i.e., before Fogerty in 1994) routinely awarded attorney’s fees to prevailing
plaintiffs in copyright cases, but awarded fees to prevailing defendants only if plaintiff’s claims
were unreasonable or baseless. This old law protected copyright owners and thereby provided
economic encouragement for authors to produce more works. This old law was reasonable, in my
opinion.
The U.S. Supreme Court in Fogerty recognized the importance of preserving the public
domain. By making it easier for prevailing defendants to be awarded attorney’s fees, Fogerty
discourages plaintiffs from litigating copyright claims, particularly when the law is unclear.
Frankly, it is scary when an unsuccessful plaintiff might owe a quarter-million dollars to his
attorneys and also owe a quarter-million dollars to opposing counsel. Very few authors can afford
to take that financial risk in enforcing their copyrights under the rules of Fogerty. In this regard,
the U.S. Supreme Court in Fogerty continued its assault on copyright that began three years earlier
in Feist,66 where the Court declared that copyright did not protect the mental effort (“sweat of the
brow”) of authors.
Worse, the Seventh Circuit now has a “very strong presumption” that a prevailing defendant
will receive attorney’s fees, without a reciprocal presumption for prevailing plaintiffs. I argue at
page 46 above that both this presumption and the essentially nondiscretionary award of attorney’s
fees violate both the statute and the rules in Fogerty.
Copyright infringers should be aware that willful infringement is likely to motivate the judge
to order the infringer to reimburse the attorney’s fees of the prevailing plaintiff, as explained at
page 71, above. Such attorney’s fees can exceed the amount of damages that the defendant is
ordered to pay plaintiff. Of course, the infringer must also pay his own attorney’s fees too.
Judges have established a list of factors to be considered in awarding attorney’s fees in
copyright cases, but the list of factors does not produce a unique, predictable, correct answer to
questions about whether to award fees or the amount of the award. Because of the lack of clear
criteria in the statute and appellate opinions (e.g., Lieb), trial judges are inconsistent in deciding the
amount of attorney's fees to award. A similar problem occurs in divorce cases, where there is a
list of factors for a judge to consider in division of marital assets, and there no unique correct
answer that is predictable.
See, e.g., Standler, Copyright Protection for Nonfiction or Compilations of Facts in the USA,
87 pp., http://www.rbs2.com/cfact.pdf , (Feb 2009).
66
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proposal
I suggest two changes to the copyright statute. First, 17 U.S.C. § 412 should be amended to
delete mention of attorney’s fees, because the current statute has a higher standard for copyright
owners than for infringers.67 The current statute does not encourage people to respect copyrights
and differs from international copyright practice, where few nations register copyrights. Second,
I urge that 17 U.S.C. § 505 be revised to reflect stronger rights for copyright owners:
(a) A prevailing plaintiff in copyright cases is entitled to full reimbursement of all reasonable
attorney’s fees and litigation expenses incurred by plaintiff, when that defendant has been
found to have willfully infringed plaintiff’s copyrights.68
(b) A prevailing plaintiff in copyright cases shall be awarded reimbursement of reasonable
attorney’s fees and litigation expenses incurred by plaintiff in refuting defenses that the
court found were objectively meritless, baseless, frivolous, unreasonable, or made in bad
faith.
(c) A prevailing defendant in copyright cases may be awarded reimbursement of reasonable
attorney’s fees and litigation expenses incurred by defendant, provided that defendant
proves that plaintiff’s claims were either objectively meritless, baseless, frivolous,
unreasonable, or brought in bad faith,69 or brought with an improper motive.70
Aside from encouraging authors to enforce their copyrights, this proposal would also encourage
guilty defendants to quickly settle litigation, to minimize fee awards to prevailing plaintiffs.
Enforcing copyrights is desirable, because respect for copyrights encourages users to pay royalties
to authors, which rewards authors for their work — thereby encouraging authors to produce more
works.
67 If that is not acceptable, then § 412 should be amended to say “... no award of statutory
damages or of attorney’s fees to a prevailing plaintiff”, to avoid the misunderstanding discussed above,
beginning at page 111.
68
This proposed statute expresses the common law. See page 71, above.
69
This proposal restores the old law in the Second Circuit, see above, beginning at page 9.
70
See page 69, above.
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Bibliography
The sources for this essay are the above-cited cases and statutes. The following is a list of law
review articles on this topic.
Jeffrey Edward Barnes, “Attorney’s Fee Awards in Federal Copyright Litigation After Fogerty,”
47 UCLA Law Review 1381 (June 2000).
Elden Dale Golden, “The Discretionary Award of Attorney’s Fees Under the Copyright Act,”
13 HASTINGS COMMUNICATIONS & ENTERTAINMENT LAW JOURNAL 411 (Spring 1991)
(pre-Fogerty).
Robert Aloysius Hyde and Lisa M. Sharrock, “A Decade Down the Road But Still Running
Through the Jungle: A Critical Review of Post-Fogerty Fee Awards,” 52 UNIV. KANSAS LAW
REVIEW 467 (Jan 2004).
Peter Jazi, “505 And All That — The Defendant’s Dilemma,” 55 LAW & CONTEMPORARY
PROBLEMS 107 (Spring 1992) (pre-Fogerty).
David Nimmer, “Even After the Court’s Ruling, The Old Man Remains Stuck Down the Road,”
39 WILLIAM & MARY LAW REVIEW 65 (Oct 1997).
Shira Perlmutter, “Freeing Copyright From Formalities,” 13 CARDOZO ARTS & ENTERTAINMENT
LAW JOURNAL 565 (1995).
______________________________________________________________________________
This document is at www.rbs2.com/caf.pdf
My most recent search for court cases on this topic was in May 2010.
begun 3 May 2010, revised 17 Oct 2012
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